For the first time in 20 years, Bonava is financing a residential construction project in Germany through a local bank. For the development of the Ludwig Hoffmann Quartier in Berlin-Buch, Berliner Sparkasse is providing project financing for the majority of the apartments.
With this step, Bonava is expanding its financing structure in Germany to include local project financing, thus setting a strategic milestone. Existing Group financing remains unaffected.
The financing by Berliner Sparkasse is a classic project financing with a loan agreement for a total of 266 apartments. Independent project companies were founded for this purpose. The term of the financing is linked to the project development. The project will be financed by approximately 30 percent equity and approximately 70 percent by debt capital. No information on the financing volume is provided.
Local project financing increases structural flexibility and at the same time expands the opportunities in the institutional investor business. Especially in the case of forward deals, the project-related financing structure creates additional negotiation options for investors, as payments can be more closely linked to purchase dates. This is also the case in Berlin-Buch, where of the total of 450 apartments planned by Bonava, 71 service apartments for senior citizens and 195 micro-apartments for young professionals and students are to be sold to investors. Bonava sells the remaining 182 apartments as condominiums directly to end customers.
“With Berliner Sparkasse, we are relying on local project financing in Germany for the first time in 20 years. This is an important strategic step for us,” says Rico Kallies, Managing Director of Bonava in Germany. “The discussions show that our projects and products are attracting great interest from regional financing partners. At the same time, we are strengthening our financial flexibility in the German market.”
The decision to finance the project locally is made against the backdrop of a stabilising market environment. The Bonava Group aims to gradually increase the share of project-related financing in all countries and, in return, to reduce centrally held loans.
The diversification of financing sources is part of the Group’s decentralization strategy and represents an important building block on the path to sustainable profitability and further growth.
