Berlin Hyp to open a London lending office

Berlin Hyp, the German mortgage bank, will be back in London in the next few months, when it opens a UK office as part of its focus on key European lending markets, Real Estate Capital  has learned.

Markus Beran, head of origination for international investors, said the branch could be officially registered in time to open in June or July.

The initiative marks the return of a London presence for the pfandbrief bank and of Berlin Hyp director of real estate finance Kevin O’Connell, who will move to be based full-time in London when the branch opens.

O’Connell previously worked out of a London base when Berlin Hyp was part of Landesbank Berlin, in the LBB office which opened in 2007.

At that time, LBB had a large capital markets business and a joint origination unit with Berlin Hyp in the UK. But after the financial crisis, LBB scaled back to core retail and corporate banking and closed its London and Luxembourg offices in 2012. Berlin Hyp was spun off from LBB on 1 January 2015, though both banks remain under the ownership of Landesbank Berlin Holding Group.

In addition to its five German offices, Berlin Hyp currently has three international offices, all of which stayed open through the financial crisis, in Amsterdam, Paris and Warsaw. “We operate in the main markets,” Beran said. “Now we are independent as a pure mortgage lender it is the time to open where we need to be.”

In the nine months to 30 September 2015, Berlin Hyp had written €3.27 billion of new loans, €4 billion including extensions. It is thought to have continued lending at a similar rate in Q4 2015, taking last year’s tally to over €5 billion.

About 75-80 percent of lending is in Germany and there are no plans to change that proportion.

This year’s lending target is expected to be similar, but slightly lower, than 2015‘s. Last week, Aareal Bank was the first German real estate bank to report its full-year results and its 2016 lending target . Aareal said its target for 2016 was €7 billion – €8 billion, which is similar to 2015’s target but lower than the actual 2015 outturn of €9.6bn.

Beran said: “2015 was a boom year. I think the target for this year will be similar to 2015 but a bit lower. We are at or near the top of the market already but there is hardly an alternative to real estate (for investors) – you have to pay to put your money in the bank – while economy-wise, the data is still strong.”

Berlin Hyp’s recent financings include acting as joint mandated lead arranger with ING lending €150 million to Oxford Properties against PariSquare in Paris, and refinancing Phillips’ Breitner Center global headquarters in Amsterdam for DVM-Group.