Deutsche Pfandbriefbank (PBB) reported this morning a post-crisis record high lending tally for its European commercial real estate lending division with €7.0bn of lending last year as well as improved profitability and post-tax return on equity.
For 2014, PBB is targeting an even greater total lending tally that 2013’s overall €8.2bn – which includes €1.2bn in its much smaller public finance division – implying, in all probability, that the German state-owned bank will beat its post-crisis annual European commercial real estate lending tally for the second successive year in 2014.
PBB declined to be drawn on specific targets for the real estate finance division.
Last year, PBB’s European commercial real estate new lending grew by 42.8% on 2012’s €4.9bn beating 2011’s €6.3bn and more than double the €3.1bn in 2010.
In 2014, PBB’s €6.93bn real estate lending tally comprised €5.3bn in new commitments and €1.7bn in extensions beyond one year across a total of 131 loans with an average maturity of 4.4 years and LTV of 61%. The average gross margin was above 225 basis points.
Next year’s re-privatisation draws nearer which brings with it a greater attention to PBB’s key financial ratios to peer group measure the bank as well as assess its relative attractiveness for potential acquirers or PBB’s viability as a standalone, independent private sector business.
Since returning to annual pre-tax profitability in 2011 with €188m, PBB reported a €124m pre-tax profit in 2012 which rose back up to €165m for 2013.
PBB’s post-tax return on equity rose (RoE) to 4.9% in 2013, from 2.1% in 2012, but the bank’s guidance of circa 3.7% for 2014. Last year’s improvement reflected the net position from a strategic UK disposal and mark to market derivative losses.
Last August, Alexander von Uslar, chief financial officer at PBB said in an analyst call for the bank’s interim results that RoE “has to be around 8% for re-privatisation,” which compares to a peer group targeted average of 11%.
Manuela Better, CEO of PBB said in a prepared statement: “pbb Deutsche Pfandbriefbank demonstrated its earnings power as well as strength on the lending and funding markets in 2013 This is a foundation we will build on pbb’s medium and long-term profitability and paving the way for reprivatisation.”
PBB’s major UK deals last year included:
- a £100m senior loan to refinance Helical Bar’s acquisition of Maple House, Artillery Lane and New Loom House as well as a shopping centre and retail park in Corby acquired in 2011;
- a five-year £48m to a subsidiary of Harbert Management Corporation’s acquisition the UK retail warehouses Diamond portfolio from Aviva Investors;
- a five-year £47.5m facility to finance Almacanter’s £112m acquisition of 125 Shaftesbury Avenue from BlackRock UK Property Fund;
- a five-year £80m senior acquisition facility for Kohlberg Kravis Roberts’ (KKR) purchase of the £112m UK retail warehouse Tuscany portfolio;