Frankfurt-based real estate bank Eurohypo has said it is focusing on more profitable new financing commitments as mega-deals - typical of the real estate business in recent years - are likely to be few and far between in 2008. With the securitisation market seen as slow to pick up again and new business expected to decline, chief executive Bernd Knobloch said in a press conference on 2007 results that the lender would focus on 'new business exceeding 20% return on equity'.
Frankfurt-based real estate bank Eurohypo has said it is focusing on more profitable new financing commitments as mega-deals - typical of the real estate business in recent years - are likely to be few and far between in 2008. With the securitisation market seen as slow to pick up again and new business expected to decline, chief executive Bernd Knobloch said in a press conference on 2007 results that the lender would focus on 'new business exceeding 20% return on equity'.
Unlike some of its competitors, Eurohypo said it had coped well during what it described as a difficult 2007. The bank said it had set a new record in commercial real estate financing, with new commitments of EUR 37 bn last year. In its home German market alone, new commitments amounted to EUR 10 bn.
Eurohypo said its pre-tax earnings nonetheless slipped 10% to EUR mln as its restated the value of those securities in its US investment portfolio backed by subprime mortgages granted to retail customers. It said the restating of their value was a precautionary move and said that pre-tax profits would have risen 19% to EUR 776 mln if restatements were excluded. Eurohypo's pre-tax return on equity was 10.1% in 2007, or 13.3% without the subprime effect.