German lender Pbb Deutsche Pfandbriefbank says it expects to resume lending to shopping centres and hotels after avoiding the asset classes for a number of years.
Speaking at Mipim, the pfandbrief bank's head of Germany, Gerhard Meitinger, said: 'For the first time for more than five years, we are looking again at shopping centres because pricing is very low, we think this is the bottom, and we can lend against them at increased margins at LTVs of 40%-50%.'
He confirmed the bank is looking at several potential opportunities in Germany which have very strong cashflows. One of them is believed to be Berlin's 90,000 m2 Gropius Passagen, on behalf of a potential buyer. The mall was put up for sale last year by current owners Unibail Rodamco Westfield and Nuveen.
Regarding hotels, he said: 'We stopped financing hotels during the pandemic and now we are seeing opportunities again. As with retail, the prices are low and this could be a good opportunity. We are talking to potential investors about established hotels which we prefer to new ones.'
German banks have been trying to increase lending to the logistics and residential sectors, partly to make up for the lack of office deals.
Meitinger said margins for strong hotels and shopping centres were more likely to be in the range 250-350 basis points compared to the bank's average margin last year of 210 bps. Pbb is targeting €6 bn-€7 bn of new loans (including extensions of over one year) in 2024 and lent €7.2 bn in 2023 (€9 bn in 2022).
Soured office loans, particularly in the US and to a lesser extent in Germany, have affected Pbb and other German banks, including Aareal which lent €4 bn in the USA. Pbb was one of Europe's most shorted stocks last month. Aareal was taken private and is now owned by Advent International and Centerbridge Partners.
At Mipim, there was talk of German banks building up their NPL teams.
They also have to contend with the elevated scrutiny they are getting from the European Central Bank. A delegate from another German bank said that, to his knowledge, the ECB had visited them all, and was of the view that prime office multiples should be more like 15 or 16 times - or over 6% - than 20 times or 5%.
