Mezzanine and More - CORESTATE Capital · Mezzanine Financing - Definition 6 Mezzanine capital has...
Transcript of Mezzanine and More - CORESTATE Capital · Mezzanine Financing - Definition 6 Mezzanine capital has...
Mezzanine and MoreTim Schymik, COO HFS
CMD - 12 September 2019
Who we are and What we do
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Key Figures Services Management
Founded2009
HeadquartersWollerau, Switzerland
Total Fund Volume1,2 bn €
AuM7 bn €
Mezzanine Financing− Offers funds to close the
financing gap
− Funds focus on German-speaking countries
− Since 2018 also Spain and
Portugal− Investment focus: Financing of
residential and commercial
properties
Fund Advisory− Structuring and support of fund
vehicles
Tim SchymikChief Operating Officer
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HFS - Stratos Funds Family
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STRATOS STRATOS STRATOS
German special fund
Launch: 05/2018
no term limit
Focus on Spain & Portugal
Fund volume € 25 million
German special fund
Launch: 09/2015
no term limit
Focus on residential real estate
DACH Region
Fund volume approx. € 200 million
German special fund
Launch 03/2014
no term limit
Focus on existing residential and commercial properties
DACH Region
Fund volume approx. € 1 billion
Immobilienanleihenfonds II Immobilienanleihenfonds IV
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Real Estate Debt – Highly Diversified with Focus on Favourable Locations
Regional Break Down of Current Outstanding Financings (in m€)
Profile of HFS Mezzanine Funds end of H1-2019
155 145 118 98 97 9245 36 26 25 18
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135
> 65% of lending volume goes to Top7 Cities in Germany
Total committed fund volume: c € 1,25bn
Predominantly German residential
# of financed projects: 57
Ø size of mezzanine financing: c € 22m
Ø interest rate: c 19,5%
Residential73%
Retail17%
Office 10%
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Mezzanine – Closing the Financial Gap
Mezzanine Financing - Definition
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Mezzanine capital has its origin in corporate financing
Mezzanine capital is also referred to as "hybrid capital“ because it is located between "real" equity capital and debt capital
Mezzanine Capital is freely negotiable and allows the greatest possible flexibility
Mezzanine capital as equity capital enables easier financing for banks due to classification as equity capital
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Current Market Situation for Mezzanine
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Real Estate Property Market
Real estate prices have been rising for the last 10 years
Regulatory provisions cause banks to tighten their underwriting criteria and limit
their lending business
Equity capital contribution for the real estate investor has since increased
substantially
More negative effects from future regulation (Basel IV) will further aggravate the
situation
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Current Market Situation for Mezzanine
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Providers
Over 50% of liquidity is still provided by funds today
The second largest area (group of providers) are insurance companies and/or pension funds
Slightly fewer providers active in the market with around 136 market participants
54%Funds
19%Family Offices 13%
FinancialInstitutions
14%Institutional
Investors
Institutional investors include insurance companies, pension funds and retirement systems. Financial institutions consist of crowdfunding platforms and and investment companies.Quelle: FAP
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54%Funds
Current Market Situation for Mezzanine
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Perspective Market liquidity and investment pressure are still high due to consistently low interest rates
We remain optimistic for the next twelve to eighteen months expecting an increase in new business
Business remaining stable
Demand for Mezzanine from developers is still high
Forecast for the next 12-18 months:
5%
slightly decliningdevelopment
4%
36%
22%
constant
36%
42%
positivedevelopment
23%
32%
higher demand
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Competitive Advantages
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I. Competitive Advantages Market Leader
10 years of experience
Funds based on liquidity management
Target Markets Germany, Austria, Switzerland, Spain and Portugal
II. Lenders’ Perspectiv With a single financing partner the effort is lower
Advantages through fast and reliable financing
HFS can assess risk and opportunitie
III. Investors’ View Diversification through clear fund structure
Access to an attractive risk-return profile
No need to set up your own department – Track Record HFS/genost successful for 10 years
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The future of the Mezzanine Market – an Outlook
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provision may not be subject to the increasing requirements of Basel III/IVCapital .
Less dependence on banks for investors
Various forms can be structured: preferred equity, joint venture, mezzanine capital, junior loan, subordinated loan or subordinated bond, etc.
Individual conditions
For investors: higher earnings prospects (risk/return profiles)
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HFS News
Whole Loan Financing
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Advantages of comprehensive financing of Senior and Mezzanine
Advantage of speed (banks 3-4 months, HFS 4-6 weeks)
Advantage of real estate projection (genost estimates the realistic development potential)
Advantage of simple and clear structures (one-stop shop: no negotiations with several parties)
Whole Loan
Equity 10-20%
Junior(subordinate)
+Senior
(priority)
80-90%
100%
High Demand from BorrowersDue to incoming financing inquiries as wellas the ongoing exchange with borrowers, ahigh demand for a comprehensive solutionwas recognized.
Standards and Processes Capital is provided on the basis of the provenbond model recognized by marketparticipants. Processes and documents areset up quickly and goal-oriented.
Investor DemandThe continuing low interest rate environmentin Europe is boosting investor demand forsenior secured investment products withattractive yields.
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Sample Transaction
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Total Investment Cost approx. 260 Mio. €
16%
42%
42% Senior Bank (110) *2,5%
Mezzanine (110) *12%
25%
75%
Equity (65)*20%
Total Ø 9,2%
Equity (40) *20%
HFS Senior (195) *4,5%
Total Ø 8,3%
Current Target
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Many thanks for your attention!
Any further questions?
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