Deutsche Pfandbriefbank writes €2.4bn of new business in Q3

Deutsche Pfandbriefbank completed €2.4bn of new real estate lending in the third quarter of 2014 as it prepares itself for an IPO or sale.

New business during the quarter was up by a third compared to the same period the previous year, the bank reported in its investor relations presentation for the three-month period.

It wrote €6.1bn of new property loans in the first three quarters of this year – up 30% on the same period last year – across 113 new deals. The business written in the first nine months had an average maturity of 5.1 years, LTV of 63% and a gross margin of 210 basis points.

The total size of its real estate finance loanbook increased by €400m to €23.9bn net after pay backs, and is up by 8% since the start of the year.

The bank said the results “underlined its role as one of the most important European providers of commercial real estate finance”.

The European Commission requires the bank to be privatised by the end of 2015 and Citi was appointed in August to advise on options, from a sale to an initial public offering Pbb’s predecessor Hypo Real Estate was nationalised in 2009, and Deutsche Pfandbriefbank has bolstered its numbers in advance. No further corporate update was given as part of the announcement.

Of the new business it wrote for the first nine months of the year, 46% was in Germany, 20% in France, 13% in the UK, 9% in central and Eastern Europe, 4% in the Nordics and 7% elsewhere in Europe.

By sector, 29% was made up of loans on office property, 26% on retail, 22% mixed-use, 14% residential, 7% against logistics, 1% against hotels and leisure and 1% on other types.

Last year Deutsche Pfandbriefbank wrote total new business of €7bn across 131 deals with an average maturity of 4.4 years, LTV of 61% and gross margin of 225 basis points.

The bank made a pre-tax profit of €44m in the third quarter, marginally up on the second quarter (€45m) and first quarter (€38m). It has reduced its cost base year-on-year by 24%, largely due to the planned ending of contracts to manage assets in FMS, the “bad bank” that managed Hypo’s problem loans.