Association of Property Bankers Annual Seminar The Road to Recovery – Senior Debt Funding

1. Association of Property Bankers Annual SeminarThe Road to Recovery – Senior Debt Funding 21 September 2010 Ingeborg M. Warschke, Helaba Landesbank Hessen-Thüringen, London Branch

2. The Road to Recovery – Senior Debt Funding Past and Present • Availability • Major Players in Europe • Asset Classes / Locations • Conditions : Amounts, Terms, Pricing, Risk Future • Banking Regulations and Supervision • Stress Tests – Basle III • Banks - Stock of Properties Conclusion

3. Availability of finance – lending volume Lending by UK-resident banks and building societies to the UK Real Estate Sector Source: Bank of England Financial Stability Report December 2009

4. Availability of finance – key terms Interest margins have gone up to historic highs..... .....and leverage has reduced to historic lows Source: De Montfort University

5. The Road to Recovery – Senior Debt Funding Maturity Profile of UK commercial property debt as at end of 2009 Source: Fitch Ratings

6. The Road to Recovery – Growing Loan Covenant Breaches Loan covenant breach are rising, although these are mostly LTV driven giving hope for better covenant compliance in 2010 Source: De Montfort University

7. The Road to Recovery – Banking Regulation and Supervision • Stress Tests – Basle IIICore Capital was 2% now: 4.5% plus 2.5% buffer = 7% • Definition of Core Capital tightened • Countries can change ratios upwards

8. The Road to Recovery – The Funding Gap The UK has the largest aggregate real estate debt funding gap (defined as the loan balance less the refinancable debt) of any market in Europe Source: DTZ

9. The Road to Recovery – Conclusion Be patient ! Ingeborg M. Warschke Head of Real Estate Financing Department London Helaba – Landesbank Hessen-Thüringen Girozentrale 3rd Floor 95 Quenn Victoria Street London EC4V 4HN ingeborg.warschke@helaba.de