main press conference expo real 2009 claus-jürgen cohausz member of the management board,...

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




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




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

.




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




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




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




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




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.




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




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

main press conference expo real 2009 claus-jürgen cohausz member of the management board,...

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hauptpressekonferenz

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clausjrgen cohausz member

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lending folie

realestate finance

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