Debt: Lender flexibility grows but eyes are on cost inflation

Although the debt market is keeping a close watch on the impact of inflation on construction costs and the supply of materials, so far there is little change in the market in Germany, according to Kim Jana Hesse, Head of Capital Partners at Berlin-based FAP Finance.

Current trends in borrower requirements vary depending upon the asset class ein question.

“If you have residential, pretty much all borrowers are looking for classical senior lenders because that is the cheapest capital you can get in Germany and for residential we get the highest leverage,” she told Real Asset Insight’s Richard Betts.

“If we look at developments, with offices it is more common to look for a senior-junior structure because with a mezzanine lender the borrower has the opportunity to fill the gap between debt finance and equity,” Jana Hesse added. The market is also witnessing an increase in the number of borrowers for whole loans.

Also, increasingly, banks are willing to work together with mass lenders to offer loans.

Click on the video to watch the full interview or listen to the podcast below.