Issue of ‘trust’ still dominates German lending - EXPO REAL

German lenders are no longer guarding their purse strings as tightly as this time last year, but one issue continues to unite them: trust.

Speaking on the panel ‘Debt and equity financing: what works and what doesn’t?’ at Expo Real last week, both lenders and borrowers said that trust between both parties was imperative, particularly for non-core deals.

‘Why shouldn’t banks lend on distressed assets, or opportunistic investments?’ said Ralph Winter, chairman of Swiss private equity group Corestate. ‘While banks have become more comfortable lending again, particularly for core and value-add products, the same cannot be said for other assets. It has a lot to do with trust,’ he said.

Edward Zoller, deputy CEO of BayernLB, agreed: ‘We want to know our clients - very well!’ he said.

A client’s record also plays a pivotal role, according to Lutz Aengevelt, a managing partner at Aengevelt Immobilien in Düsseldorf. ‘Any deal really depends on the client: do they have a bad record, what sort of product do they have? It’s hard to secure funding for development projects in general, although residential projects tend to be given the "red carpet" treatment.’

Ultimately, lenders and borrowers need to pull together in the wake of the financial crisis to create a workable environment, said Winter: ‘After the crisis, we all had to work hard because something had gone wrong. What we need now is a good hybrid between property management, financing and know-how,’ he said.