CEE Briefing: Local Polish banks carve out development niche

Polish banks have carved out a niche for themselves in real estate as providers of development finance, PropertyEU's latest CEE Investment Briefing has heard.

Martin Erbe, head of international real estate finance for northern and Central Europe at German bank Helaba, said there is a clear split in CEE financing with three distinctive lending groups.

The first group is the Polish banks who have turned to development lending as accessing euro financing for other types of loans was very expensive for them. Though seen as local, most of the banks providing development finance are subsidiaries of Italy's Unicredit Group or an Austrian bank.

Five Polish banks, for instance, are financing Ghelamco Poland's 110,000 m2 Spire skyscraper project in Warsaw. Erbe noted that such financing is available but costly at 300-plus basis points.

The second group of real estate financiers in CEE are more or less Austrian banks working through subsidiaries in the Czech Republic or Slovakia and, to a lesser extent, in Hungary and Romania.

Erbe said the third group are German banks, like Helaba, pbb Deutsche Pfandbriefbank and Aareal. These banks are concentrating on core properties in core markets - Poland, Czech Republic and Slovakia - with minimum deal volumes of €25-30 mln.

'Helaba is underwriting up to €100 mln on our own. We are at the moment pitching for a deal with a volume of €200 mln for which we would probably do the full underwriting,' Erbe said.

He added that financing is available for all types of product, though it is more difficult and more expensive for some product. The maximum LTV is 60-65%.

Daniel Harris, managing director Europe and CE at Tristan Capital Partners, said financing was available for 'decent product'.

That said, most of the recent larger transactions have been all-equity deals, according to Neil Gregory-Eaves of Colliers International.

Erbe agreed, saying that Helaba had been the financier of the Silesia City shopping centre in Katowice, Poland and the bank approached Allianz Real Estate, which was buying the asset, to say it was happy to continue its financing role. Allianz opted instead for an all-equity transaction as it has so much liquidity.

Asked whether banks had to move up the risk curve to do business, Erbe responded: 'No, certainly not. We would rather reduce business than go back up the risk curve.'