Association of Property Bankers Annual Seminar
The Road to Recovery – Senior Debt Funding

21 September 2010
Ingeborg M. Warschke, Helaba Landesbank Hessen-Thüringen, London Branch
The Road to Recovery – Senior Debt Funding

2
Past and Present

Availability

Major Players in Europe

Asset Classes / Locations

Conditions : Amounts, Terms, Pricing, Risk
Future

Banking Regulations and Supervision

Stress Tests – Basle III

Banks - Stock of Properties
Conclusion
Availability of finance – lending volume

3
Lending by UK-resident banks and building societies to the UK Real Estate Sector
Source: Bank of England Financial Stability Report December 2009
Availability of finance – key terms

4
Interest margins have gone up to
historic highs.....
.....and leverage has reduced to
historic lows
Source: De Montfort University
The Road to Recovery – Senior Debt Funding

5
Maturity Profile of UK commercial property debt as at end of 2009
Source: Fitch Ratings
The Road to Recovery – Growing Loan Covenant Breaches

6
Loan covenant breach
are rising, although
these are mostly LTV
driven giving hope for
better covenant
compliance in 2010
Source: De Montfort University
The Road to Recovery – Banking Regulation and Supervision

7

Stress Tests – Basle III
Core Capital
was
2%
now:
4.5% plus 2.5% buffer = 7%

Definition of Core Capital tightened

Countries can change ratios upwards
The Road to Recovery – The Funding Gap

8
The UK has the largest aggregate real estate debt funding gap (defined as the loan
balance less the refinancable debt) of any market in Europe
Source: DTZ
The Road to Recovery – Conclusion

9
Be patient !
Ingeborg M. Warschke
Head of Real Estate Financing Department London
Helaba – Landesbank Hessen-Thüringen Girozentrale
3rd Floor
95 Quenn Victoria Street
London EC4V 4HN
[email protected]
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Ingeborg Warschke APB Presentation