Deutsche Hypo, Nord/LB launch first institutional debt fund

We reported in a recent issue of REFIRE about a discussion we had had with Andreas Pohl, board member at the Hanover-based Deutsche Hypo, in which he described the shifting approach traditional German real estate financiers are taking to new business.

His bank Deutsche Hypo and NORD/LB Asset Management, who are both part of the landesbank NORD/LB, have now launched their first debt fund for institutions. The Spezialfonds, set up initially for an unnamed investor, will have an starting volume of €200m, and will invest in Deutsche Hypo’s key markets of Germany, UK, France, Benelux and Poland.

The fund will invest in a diversified property financing portfolio, secured against core office, residential and retail assets, said Deutsche Hypo which takes over servicing. Just last year the bank entered into a strategic partnership with the Bayerische Versorgungskammer (a major Bavarian occupational pension fund group) also to invest in real estate in Deutsche Hypo’s key business markets, with the bank providing finance and real estate know-how.

“We are happy to have created a product that matches investors’ strict requirements for both safety and yield,” said Pohl in a statement. “Banks are finding themselves in a state of flux at the moment: The classic function as mere loan providers is no longer as important as it was. Now, it is far more important to acquire further providers of capital and then to successfully structure the financing.”

NORD/LB Asset Management will handle the management and risk due diligence. According to Dr. Hinrich Holm, NORD/LB board member for capital markets business, “We’re finding that institutional investors such as savings banks, insurers and pension funds are increasingly taking up the offer to invest in our asset classes, so we can well imagine launching further debt funds in the near future.”