News

Hypo to double lending to £4bn

News

Estates Gazette

05 December 1998

by Erica Billingham

Hypo Vereinsbank is about to unveil ambitious plans to double the size of its loan book to more than £4bn.

The German mortgage bank, one of the biggest property lenders in the UK, has set up HVB Real Estate Capital, which will be launched on January 1. HVB will be the bank’s London-based subsidiary and market sources believe that the German lender will bring in up to three outside investors – thought to include one UK institution – to boost its firepower.

Chief executive Georg Funke said the new structure will give HVB up to £1.1bn for more risky equity and mezzanine finance, on top of its traditional debt funding.

Hypo bank has operated in the UK through its London branch office for almost 10 years. It has a £2.3bn book of property investment and development loans.

Funke said the move was driven by clients who wanted equity finance as well as straightforward debt: “I don’t want to take the wildest risks, but I don’t want to be the most boring senior debt lender.”

The amount of new business that HVB writes will depend on the strength of the market, said Funke. But he is confident about the next 12 months. “I don’t expect to write less business next year than this,” he said. Hypo has lent £1.9bn since the beginning of 1998.

The bank is funding high-profile developers, such as Heron and Lend Lease, and has underwritten numerous “big-ticket ” investment loans, often arranged with a syndicate of other banks.

In July, Hypo put together a £160m package for Greycoat’s consortium to help fund its acquisition of Tower 42 (the former NatWest Tower). Earlier this year, the bank refinanced Pillar’s retail park portfolio with a £350m loan shared with nine other German lenders. And last month, Hypo agreed, with Bank of Scotland, a £200m facility for Quintain.

Based in London, HVB’s 55-strong team will bring together the property lending and investment activities of Hypo Bank and Vereinsbank which merged last year.

Hypo Vereinsbank is the second largest bank in Germany behind Deutsche Bank, which this week announced a £6bn takeover of US investment bank Bankers Trust.

by Erica Billingham Hypo Vereinsbank is about to unveil ambitious plans to double the size of its loan book to more than £4bn. The German mortgage bank, one of the biggest property lenders in the UK, has set up HVB Real Estate Capital, which will be launched on January 1. HVB will be the bank’s London-based subsidiary and market sources believe that the German lender will bring in up to three outside investors – thought to include one UK institution – to boost its firepower. Chief executive Georg Funke said the new structure will give HVB up to £1.1bn for more risky equity and mezzanine finance, on top of its traditional debt funding. Hypo bank has operated in the UK through its London branch office for almost 10 years. It has a £2.3bn book of property investment and development loans. Funke said the move was driven by clients who wanted equity finance as well as straightforward debt: “I don’t want to take the wildest risks, but I don’t want to be the most boring senior debt lender.” The amount of new business that HVB writes will depend on the strength of the market, said Funke. But he is confident about the next 12 months. “I don’t expect to write less business next year than this,” he said. Hypo has lent £1.9bn since the beginning of 1998. The bank is funding high-profile developers, such as Heron and Lend Lease, and has underwritten numerous “big-ticket ” investment loans, often arranged with a syndicate of other banks. In July, Hypo put together a £160m package for Greycoat’s consortium to help fund its acquisition of Tower 42 (the former NatWest Tower). Earlier this year, the bank refinanced Pillar’s retail park portfolio with a £350m loan shared with nine other German lenders. And last month, Hypo agreed, with Bank of Scotland, a £200m facility for Quintain. Based in London, HVB’s 55-strong team will bring together the property lending and investment activities of Hypo Bank and Vereinsbank which merged last year. Hypo Vereinsbank is the second largest bank in Germany behind Deutsche Bank, which this week announced a £6bn takeover of US investment bank Bankers Trust.