Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 Presentation by Harvey Kasin, Hypo Real Estate Bank International AG Bank Funding of Retail property November 2008.

Similar presentations


Presentation on theme: "1 Presentation by Harvey Kasin, Hypo Real Estate Bank International AG Bank Funding of Retail property November 2008."— Presentation transcript:

1 1 Presentation by Harvey Kasin, Hypo Real Estate Bank International AG Bank Funding of Retail property November 2008

2 2 Introduction ׀What is Property Lending? ׀Retail Property Lending ׀An Example ׀Property Stats

3 3 What is property lending? Lending a proportion of the cost of construction or value of a property ׀Senior lending 0 – 75% ׀Mezzanine lending 75 – 85% ׀Stretched mezzanine 85%+ How we earn money ׀Margin ׀Fees ׀Profit share Key Terms ׀LTV ׀LTC ׀ISC ׀DSC ׀Exit Yield ׀Amortisation / Bullet What happens when things go wrong? ׀Why? ׀LTV breach – market changes, income fall ׀ISC breach – centre / tenant failure, vacancy ׀More serious than other types of Real Estate ׀Receivership or administration

4 4 Retail Property London Investment ׀Typical 75% LTV ׀Quality of Asset Manager / track record ׀Anchor tenants ׀Occupancy levels ׀Quality of scheme / mix of tenants ׀Retail hierarchy / competition ׀Rental income / value ׀Asset Management Opportunities Development ׀Development experience and design team ׀Design / layout location position of key tenants ׀Procurement route ׀Cost management ׀Cost overrun guarantees ׀Period of loan / stabilisation ׀% pre let Key Factors ׀Property on a ladder ׀Day 1 LTC/LTV ׀Cash flow assumptions made ׀Exit Yield

5 5 Retail Property London Stand alone shop or parade ׀Quality of covenant ׀Rent & term of lease ׀Pitch & quality of town In town shopping centre ׀Lot size ׀Competition ׀Condition, capex ׀Quality of Asset Manager etc ׀Asset Management opportunities Out of Town ׀Planning ׀Environment ׀Car Parking FOC Factory Outlet Centres ׀Demographic Profile ׀Quality of management ׀Partnerships of landlord & tenant

6 6 European Investment Market Prime Yields

7 7 European Investment Market Prime Rental Growth

8 8 November % 7.81% £150.80m 94% £141.38m 0.75% £8.85m 1.13 Bullet or Amort? An example A well experienced client approaches us to fund his purchase of the main shopping centre in well established strong town. The centre is considered by the market as a prime shopping centre. November 2008 £10m £12.5m 6.25% 7.81% £150.8m 75% £113.10m 3.7% 3.0% £7.6m 1.31 Bullet or Amort? June 2009 £10m £7.5m 7.0% 5.25% £134.65m 85% £114.45m 3.0% 1.5% £5.15m 1.95 Bullet or Amort? March 2007 Rent£10m ERV£12.5m Cap Yield5% Reversionary Yield 6.25% Value£188.5m LTV75% Loan£141.38m 5 yr cost of finance 5.5% Margin0.75% Interest Bill£8.85m ISC1.13 Bullet or Amort?

9 9 Development is proceeding faster in maturing/emerging markets

10 10 Retail investment volumes have remained low into 2008

11 11 Shopping CentreCity / TownOpening dateTotal size of scheme sq ft Total size of scheme sq m Victoria SquareBelfastMarch ,00075,000 HoundshillBlackpoolSeptember ,00037,000 Market PlaceBoltonSeptember ,00025,000 Cabots CircusBristolSeptember 20081,000,00092,900 Grand ArcadeCambridgeMarch ,00042,000 EdenHigh WycombeMarch ,000 High CrossLeicesterSeptember ,00052,000 Liverpool OneLiverpoolMay 20081,700,000160,000 The ElementsLivingstoneOctober ,00035,000 WestfieldLondonOctober 20081,600,000150,000 Trinity SquareNottinghamNovember ,00017,500 Eagles MeadowWrexhamOctober ,00037,000 Union SquareAberdeenAutumn ,00065,000 Arc (formerly known as the cattle market) Bury St EdmondsSpring ,00040,000 St Davids 2CardiffAutumn ,00090, Shopping Centre openings

12 12 Investment Market Summary ׀Change in buyer profile – low geared Opportunity Funds or Vulture buyers ׀Due Diligence and decision making significantly slower ׀Continued Outward shift in vendors price expectations ׀Distressed vendors and Off market Discussions ׀Return to the market of some familiar names ׀More attractive returns for property from lower Capital Value Base ׀Re-pricing of risk-increased discount for Secondary Property

13 13 Retail Investment – The next Few Months ׀Few buyers with access to significant equity ׀Valuations generally continuing to fall ׀Retailers Christmas trade will affect confidence in the sector ׀Debt buyers unlikely to return in the very short term ׀Opportunities exist for genuine buyers

14 14 Growth in shopping centre stock

15 15 Major retail investment deals Q


Download ppt "1 Presentation by Harvey Kasin, Hypo Real Estate Bank International AG Bank Funding of Retail property November 2008."

Similar presentations


Ads by Google