Timeline: German property lender PBB and the crisis-hit US market

Deutsche Pfandbriefbank AG

07/03/2024 08:16

(Updates with March 7 entry, new graphics, updates first and
third graphics, adds fourth graphic)
    By Tom Sims and John O'Donnell
       FRANKFURT, March 7 (Reuters) - Deutsche Pfandbriefbank
 PBBG.DE  (PBB), one of Germany's top property financiers dating
back to the 1860s and bailed out by the government in 2009, is
navigating what it calls "the greatest real estate crisis since
the financial crisis".
    The bank has assured investors it has enough funds to cope
with a major downturn in the U.S. commercial real estate market.
But its shares have fallen sharply this year as short sellers
bet against the bank. 
    "We are well aware of the need to win back trust," the bank
said on Thursday as it reported a plunge in profit.
    The following is a timeline of events around the bank:
    
    2005-2008
    Hypo Real Estate (HRE), a predecessor of Pfandbriefbank,
enjoys a stint on Germany's DAX index of blue-chip stocks. 
    Its business was similar to that of an investment bank for
property projects, and it had helped to bankroll the purchase of
the Lloyd's building in the City of London financial district,
as well as the refinancing of Canary Wharf in the city's
Docklands area.
    
    2008
    With the global financial crisis in full swing, Lehman
Brothers collapses, sending shockwaves around the globe.
    
    2009
    HRE, which owns PBB, is fully nationalised, after being
deemed too important to fail given its role in Germany's covered
bond market - bonds backed by mortgages that are a major source
of refinancing for the banking sector in Europe's biggest
economy. The real estate lender received a 10 billion euro 
($10.80 billion) capital injection as well as 145 billions in
liquidity guarantees. 
    
    2011
    The European Commission approves the bailout but a condition
is that PBB will have to be privatised by the end of 2015. 
    
    2015
    PBB lists on the Frankfurt stock exchange at an issue price
of 10.75 euros per share. Its stated focus is Germany, Britain,
France, the Nordics and some countries in central and eastern
Europe. 
    
    2016
    PBB expands into the U.S. market under current CEO Andreas
Arndt, at first concentrating on New York, Boston and
Washington.
    
    2018
    PBB opens an office in New York and widens its focus to U.S.
cities including Chicago, Los Angeles, San Francisco and
Seattle. 
    The cover of its 2018 annual report shows a Manhattan
building that PBB helped finance with $100 million. "Our
commitment in the U.S...is constantly growing," it said in the
report. 
    
    2019
    It provides a $240 million loan for an apartment building in
Long Island City.
    
    2020
    PBB arranges a $250 million loan for the financing of a 
Fifth Avenue building in New York, whose tenants include luxury
department store Bergdorf Goodman.
    It makes a $150 million loan for the "Solar Carve Tower" in
New York City's Meatpacking District. 
    
    2022
    Central banks including the European Central Bank and the
U.S. Federal Reserve begin aggressive interest rate increases to
battle inflation, a significant turning point for the property
industry that had benefited from years of low rates.
    PBB's total assets stand at 53 billion euros at end-2022,
and its financing volumes in its core real estate business total
29.3 billion euros.
    
    2023
    PBB's U.S. business has grown to 5 billion euros,
representing 15% of its overall portfolio.
    The lender gets a new chair with Louis Hagen and it
announces Kay Wolf will succeed Andreas Arndt as chief executive
officer at an unspecified date in 2024.
    In November, PBB says real estate market "weakness is
persisting for longer than expected" and discloses a
"significant" increase in risk provisions, "predominantly
related" to financing of U.S. offices.  
    
    2024
    Feb. 7 The bank announced a doubling in risk provisions as
it described "the greatest real estate crisis since the
financial crisis".
    Feb. 8 PBB tells investors it has enough funds to cope with
a downturn in the U.S. commercial real estate market.
    Feb. 9 Germany's RAG Foundation, one of the bank's biggest
shareholders, trims its stake in PBB as its shares and bonds
come under pressure. 
    Feb. 14  The credit rating agency S&P downgraded PBB to a
notch above junk on concerns about its exposure to the
commercial real-estate sector and gave it a negative outlook.
    Feb. 15 Shares plunge after the downgrade.
    Feb. 16 Short sellers increase their bets against the bank,
with one saying the bank risked being sucked into a "downward
spiral".  PBB said its capital buffers were strong and its
business profitable.
    Mar. 7 Posts its lowest annual profit and biggest loss for
soured loans since going public, underscoring the severity of a
widespread real estate slump.
    ($1 = 0.9261 euros)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Top commercial property lenders    https://reut.rs/3ONZ5Su
Explainer: European banks and their $1.5 trillion commercial
property headache    https://www.reuters.com/business/finance/european-banks-their-15-trillion-commercial-property-headache-2024-02-15/
Under pressure    https://reut.rs/3IpPzkX
Real-estate concerns    https://reut.rs/4a2kKie
More provisions, less profit    https://reut.rs/48DmrRP
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 (Reporting by Tom Sims and John O'Donnell; editing by Barbara
lewis)
 ((Tom.Sims@thomsonreuters.com; +49 30 220 133 645;))