main press conference expo real 2009 claus-jürgen cohausz member of the management board,...
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Main Press Conference EXPO REAL 2009
Claus-Jürgen CohauszMember of the Management Board, Westdeutsche ImmobilienBank AG
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 2
Crisis in the financial markets: What happened?
Low interest rates in the US mortgage market and rising property prices led to many mortgages being granted to customers with much lower credit ratings
Loans transformed into tradable securities (globalisation: marketed worldwide) Restrictive monetary policies of the Federal Reserve caused a rise in interest rates
Payment defaults, compulsory auctions Property prices fell
Decreasing trust in the quality of securitised property loans Summer 2007: Securities market collapses
High losses and refinancing difficulties on the part of banks that were involved in the US mortgage market (IKB, SachsenLB, Goldman Sachs, Northern Rock, Fannie Mae and Freddie Mac, HRE)
September 2008: Bankruptcy of the fourth largest bank in the US: Lehman Brothers Loss of trust and lack of transparency between the banks: interbank trade comes to
a halt Banks have considerable difficulty in refinancing themselves, which then impacts
on lending
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 3
Collapse of the main pillars in refinancing
The urgent need of companies and banks to obtain finance/refinance coincides with a shortage of liquidity on the capital markets Interbank market impaired by the loss of trust Liquidity available only at a high mark-up Securities market stalls Sales of mortgage bonds cease
Refinancing to deadlines is virtually impossible
Limited new business opportunities for the banks
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 4
Spread 3M-Euribor vs. 3M-EONIA Swap
0,0
0,5
1,0
1,5
2,0
2,5
01.0
9.20
08
15.0
9.20
08
29.0
9.20
08
13.1
0.20
08
27.1
0.20
08
10.1
1.20
08
24.1
1.20
08
08.1
2.20
08
22.1
2.20
08
05.0
1.20
09
19.0
1.20
09
02.0
2.20
09
16.0
2.20
09
02.0
3.20
09
16.0
3.20
09
30.0
3.20
09
13.0
4.20
09
27.0
4.20
09
11.0
5.20
09
25.0
5.20
09
08.0
6.20
09
22.0
6.20
09
06.0
7.20
09
20.0
7.20
09
03.0
8.20
09
17.0
8.20
09
.
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 5
CMBS emissions volumes Europe and USA
0
10
20
30
40
50
60
70
2003 2004 2005 2006 2007 2008 1.Halbjahr
2009
0
50
100
150
200
250
2003 2004 2005 2006 2007 1.Halbj.2008
2.Halbj.2008
1.Halbj.2009
in € bn in USD bn
0 0
Europe USA
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 6
Transaction volumes in the main German cities drop significantly
0
1000
2000
3000
4000
5000
6000
7000
8000
Berlin Düsseldorf Frankfurt/Main Hamburg Köln München
2003 2004 2005 2006 2007 2008 1. Halbjahr 2009
in € mill.
Quelle: Atisreal/BNP Paribas Real Estate
n/a
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 7
New business: Real-estate finance 1st half 2008 and 1st half 2009
0
1
2
3
4
5
6
7
8
Eurohypo Hypo RealEstate
WestImmo Aareal Bank Berlin Hyp DeutscheHypo
Corealcredit MünchenerHypo
1. Halbjahr 2008 1. Halbjahr 2009
In € bn
-42%
-41%
-82%
+3%
-46%-57% -21% +29%
First-half 2008 First-half 2009
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 8
Impact on investors
Higher refinancing costs lead to tougher credit conditions Expansion of the usual test criteria of:
Property location Current and possible alternative uses Sustainability and stability of cash flow Value development and potential for further enhancement
to include Special consideration of a balanced risk/yield structure Special consideration of the actual cash flow Stronger consideration of risks relating to the individual property
Investor required to put in a higher level of equity capital More hedging of cash-flow risks necessary (equity capital reserves,
liabilities) Shorter credit periods (3-5 years) Advantages for investors with high capital reserves and a long-term
investment horizon Opportunistic, leverage-oriented investors no longer active in the market
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 9
Sales of mortgage bonds in Q2 2009 much improved
At the end of 2008 sales had almost halted entirely (could only be presented at the ECB)
Significant rise in issues in Q2 2009
July / August are generally weak months because of the summer break
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
Pfandbriefabsatz in Mio. EURSource: vdp
Mortage bond sales in € mill.
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 10
Mortgage-bond spreads continue to narrow, but still at a higher level
Spread of 10-year mortgage bonds to the 10-year swap (in bps)
Other covered bonds (Spain, UK, etc.) still had much wider spreads
Slight improvement in Q2, helped by the ECB´s buying programme.
Sorce: Reuters
WestdeutscheImmobilienBank AGGroße Bleiche 4655116 Mainz
Claus-Jürgen CohauszVorstand5. Oktober 2009
Hauptpressekonferenz Expo Real 2009Seite 11
Outlook: Situation improving on the markets
Improvement in sentiment is reflected in the figures: order intake, production and export rise in Germany
Company reporting on Q2 leads to growing euphoria about the economy in the share markets; significant rise in share prices worldwide; its sustainability, however, is questionable
Positive outlook for the economy – stabilisation in the global economy, but coupled with expectations of rising inflation
Measures take effect: since Q2 2009 increasing stabilisation in the banking system and rising trust among the players in the capital markets – spreads narrowed, uncovered refinancing tools can be placed again