Gap between prime and non-prime lending rates set to widen

The gap between lending rates for prime and non-prime properties is set to increase in some parts of Western Europe such as the Netherlands, Germany and Poland, Jan-Evert Post, member of the global management team at ING Real Estate Finance, told the PropertyEU Debt Finance Investment Briefing at Expo Real. ‘In some markets it will decrease and in the southern markets it will stay put, but in Germany it will widen because of the availability of liquidity and the market attractiveness.’

ING Real Estate Finance has a global property finance portfolio of some EUR 30 bn, Post said. The Dutch lender is seeking to increase its exposure slightly in Germany, he added, but stressed that growth would be very selective. ‘Forget about big developments, development finance is more of a local play. What we finance is solely on the basis of an existing relationship, and preferably or solely on the basis of an add-on project where there is already an existing cashflow.’

With most international banks retreating to their home markets, investors are finding it increasingly more difficult to obtain financing from a local lender. Central and Eastern Europe is an exception, Christian Delaire, CEO of AEW Europe, told the Investment Briefing. ‘This part of Europe is where we are most active with local banks, mainly in Poland, but also in Hungary and Czech Republic. Hungary is not the easiest market to get financing these days, but we succeeded in financing a recent acquisition, using Hungarian bank to finance the Hungarian part of the deal.’

The full report on the Investment Briefing appears in the November issue of PropertyEU. Click on the link below to subscribe: