The savings banks are considering selling the real estate financier – but only within their own group.
(Photo: Bloomberg)
Frankfurt The much sought-after real estate financier Berlin Hyp almost tripled its profit in the first nine months of the year. The pre-tax result climbed from 14 to 40 million euros, as the institute announced on Thursday. The reasons for this were, among other things, the brisk new business, which increased to 5.1 billion euros, as well as a significantly lower risk provision for loans at risk of default.
“The proportion of hotels and retail in our entire portfolio is low, but here too we have not recorded any loan defaults as a result of the pandemic,” said CEO Sascha Klaus in an interview with the Handelsblatt. “This is mainly due to the state aid for the companies concerned and the strength of the property owners, who can cope with a lot.”
The office real estate market has also proven to be more robust than initially thought since the outbreak of Corona. “Some companies have now brought a large part of their workforce back to the office,” reports Klaus. Others used the lower attendance rate of their employees to modernize the office space and set up more meeting points, for example.
“Some companies are also reducing their office space, which will lead to a slight increase in vacancy rates,” explained Klaus. “But that is happening to a manageable extent and will not shake the industry, because in many cities the vacancy rates are now at a very low level.”
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For the year as a whole, Berlin Hyp is assuming a pre-tax result that is well above the previous year’s figure of EUR 24 million. In terms of new business volume, the institute will almost reach the previous year’s figure of 6.7 billion euros and is thus above previous expectations. “The attractiveness of real estate as an asset class has not suffered due to Corona – on the contrary,” says Klaus. Insurers and pension funds continued to invest a lot of money in real estate.
“Strategic considerations play a role” in the sales process
Berlin Hyp belongs to the German savings banks, which started a sales process for the institute in the summer. The Landesbanken Helaba and LBBW as well as the Sparkasse fund provider Deka have submitted bids.
Klaus doesn’t want to reveal which solution he would prefer. “Our owners alone decide whether and to whom Berlin Hyp will be sold.” However, the CEO made it clear that it will probably not only depend on the offer price. “In the end, both economic and strategic considerations will play a role when deciding how to proceed with Berlin Hyp.”
Should there be a sale, this would at least be a small step in the consolidation among the top public institutions, which has long been required by many savings banks. Deka and Helaba, which are wholly or majority-owned by the Sparkassen, therefore have the best opportunities from the perspective of insiders. After a takeover of Berlin Hyp, you would be predestined to drive forward the consolidation of the sector.
For a long time, many commercial real estate financiers had great worries about the stricter Basel III capital requirements, which are now to be gradually introduced in the EU from 2025. Berlin Hyp has now given the all-clear on the subject.
“Our capital requirements will increase moderately through the Basel III rules up to 2030,” said CEO Klaus. “This is manageable for us because we have continuously strengthened our capital in recent years and therefore we do not need any additional capital.” At the end of the third quarter, Berlin Hyp’s core capital ratio fell slightly to 13.3 percent.
More: Explosive deal – How the bidding competition for Berlin Hyp electrifies the savings bank sector