Club deals gain in popularity in Germany, panel hears

Securing finance in Germany has become significantly 'relationship driven' with smaller funders now more likely to back niche property projects, a leading expert in the market has said.

Speaking at the PropertyEU Investment Briefing on Germany which was hosted by Henderson Global Investors in London on Tuesday, Activum SG managing partner Saul Goldstein said it is now easier to get financing if an investor has sponsorship or a well established relationship with backers.

'People are focussed more on relationship-driven lending where they really want to know the asset management team and the platform that’s sponsoring an asset.

'Unless you’re truly established as a global or dominant player it’s going to go more to niche oriented groups that are perceived as serious. Getting financing it not as easy as it was but it’s relationship driven so it speaks well for those of us who have been there for a long time.'

Goldstein was joined on the panel by a number of property investment specialists from cross-sector backgrounds.

Stefan Wundrak, director of property research for Henderson Global Investors, said that the type of banks most actively providing financing is also changing. 'It seems to be mainly smaller banks which haven’t been so active before the crisis, it’s not the big names which are the most competitive. It’s mostly banks we haven’t heard of before. It’s savings banks, local and smaller banks.'

One of the key outcomes of the discussion was the trend towards 'club deals', in which smaller banks are joining forces to back large projects. All deals ‘on anything larger than a loan requiring EUR 75 to EUR 100 mln require clubbing’, said Goldstein.

Karim Esch, Union Investment co-head of institutional property, said there was evidence that banks are seeking to be more active in their lending, though the type of assets now receiving backing are more specialist than in the last three or four years.

'We know that the banks are starting to get active on the lending side. They have no alternative to making money in their traditional business so they start getting in with smaller size assets. It’s a very local business. You get financing in even "B" and "C" locations with smaller banks because they know the markets there very well.'