Main Press Conference EXPO REAL 2009 Claus-Jürgen Cohausz Member of the Management Board, Westdeutsche ImmobilienBank AG.

Präsentation zum Thema: "Main Press Conference EXPO REAL 2009 Claus-Jürgen Cohausz Member of the Management Board, Westdeutsche ImmobilienBank AG."—  Präsentation transkript:

1 Main Press Conference EXPO REAL 2009 Claus-Jürgen Cohausz Member of the Management Board, Westdeutsche ImmobilienBank AG

2 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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

3 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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

4 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 4 Spread 3M-Euribor vs. 3M-EONIA Swap

5 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 5 CMBS emissions volumes Europe and USA in bn in USD bn 0 0 Europe USA

6 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 6 Transaction volumes in the main German cities drop significantly in mill. Quelle: Atisreal/BNP Paribas Real Estate n/a

7 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 7 New business: Real-estate finance 1st half 2008 and 1st half 2009 In bn -42% -41% -82% +3% -46% -57% -21% +29% First-half 2008 First-half 2009

8 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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

9 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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 Source: vdp Mortage bond sales in mill.

10 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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

11 Westdeutsche ImmobilienBank AG Große Bleiche 46 55116 Mainz Claus-Jürgen Cohausz Vorstand 5. Oktober 2009 Hauptpressekonferenz Expo Real 2009 Seite 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