Hot as Helaba: How a German Bank Is Proving Slow and Steady Can Win the Race

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When the good times roll, flashy, thriftless lenders get all the glory.

SEE ALSO: Stellar Lands $125M Refinance on Historic West End Avenue Resi Tower

But at a turning point when equity markets, interest rates and politics are all as unpredictable as they’ve been in recent memory, the most conservative, conscientious banks can seem like the smartest cookies in the jar.

It’s high time for a Helaba moment.

The German originator’s moniker lacks the same household cachet as that of a Deutsche Bank or an Allianz. (It doesn’t help that Helaba’s full name, Landesbank Hessen-Thüringen, doesn’t exactly roll off the American tongue.) But quietly, the Frankfurt-based lender has blossomed into a force capable of leading marquis financings in New York City and beyond.

Under the rock-steady leadership of Hans-Christian Ritter, the longtime chief of the bank’s U.S. branch in New York City, it now lays claim to a real estate balance sheet worth around $10 billion, built on a dependable volume of big-ticket deals with relatively small handful of trusted sponsors. Typical years see it generate $2.5 billion to $3 billion in new business—without much deviation in either direction no matter what the business climate, its executives say. And in the first six months up and running, a syndication platform Helaba launched only last summer has already churned out deals worth three-quarters of a billion dollars combined.

Though Ritter retired on Jan. 31 at the age of 70, the bank is promoting from within to replace him, elevating two deputies who insist that continuity is the watchword. Rick Lavrich, an experienced native Ohioan who’s been with Helaba since 2005, is stepping up to take Ritter’s place as the head of the New York City office. Anne-Marie Francis, another veteran American banker approaching her 20th year at Helaba, has been tapped to fill Lavrich’s shoes as the leader of the bank’s U.S. real estate team. (Over the summer, the bank poached Brad Bitting, a budding young syndication specialist from BNY Mellon, to run its new syndication platform.)

“It’s hard to walk away from this, but at some point, you just have to,” Ritter reflected a couple days before his last on the job. “If I were a developer, I could sort of phase it down, but at an organization like mine, they expect you to be around and responsive 150 percent of the time.”

It’s an organization that’s come a long way since Ritter joined nearly 30 years ago. Helaba’s real estate business in the U.S. dates to 1995 when, under Ritter’s guidance, it snuck into property lending at volatile moment for Big Apple asset prices. Seeing that other major lenders were in retreat, he sensed opportunity.

“Even many large U.S. banks actually closed their real estate activities or got rid of their clients,” Ritter remembered. “It was not good. So it was a very odd time to enter the real estate market, but it was a strategic decision. At the end of the day, it was a perfect time for us, because if you only have about 10 lenders left standing and you’re one of them, you have total access to the market.”

In little ways, the bank still feels like more of an outsider in the New World than some of its better-known European peers. (When you email a Helaba employee who’s set a vacation alert during travel, you get not an AUTOMATED REPLY subject line but an AUTOMATISCHE ANTWORT.)

But after a few conversations, you lose count of the number of times Helaba executives point out that the bank actually owns its New York City office space: a 24th-story suite at 420 Fifth Avenue, a few blocks south of Bryant Park. Not for nothing are its two new top names Americans whose resumes boast years of prior experience in domestic shops. And though Ritter’s continental mien and gentle German accent betray his roots, he’s a proudly naturalized American citizen himself. Married to American wife—the couple doesn’t have children—he has no plans whatsoever to decamp back to Europe in his retirement.

It’s clear that Ritter’s colleagues hold him in the esteem of a founding father. Members of Helaba’s board of directors flew in from Germany to help celebrate his retirement, and Lavrich insisted on sharing audio of a heartfelt speech he gave in Ritter’s honor at a client dinner marking the occasion. Francis, who joined Helaba after an early-career stint at Wells Fargo, noted that working with Ritter was a major draw when she was looking to take the next step in the early 2000s.

“I’d liked the international side of the bank, and the fact that it was a boutique,” Francis said. “But when I was moving up [from Wells Fargo], I interviewed in a number of other firms as well, and Christian was always a complete gentleman.”

Yet as Lavrich takes the helm, his colleagues give their new boss generous credit for helping the bank lay its U.S. foundation as well. When Lavrich came aboard in 2003, the bank was quickly building a reputation as a useful contributor to debt deals. But its work was often limited to participating in financings led by another lender. Lavrich, a veteran of Manufacturers Hanover Corporation, Marine Midland Bank and FleetBoston Financial, played a key role in helping Helaba launch its construction platform, which set the institution up to establish relationships with the short list of top-flight New York City developers Helaba still prefers to trade with today.

“These days, about 75 percent of the deals we do are agented by Helaba,” Lavrich said. “That was a big change in the bank’s development.”

Moving into construction also meant significantly expanding the loan administration team. But the investment paid off, because a high number of those construction loans have led directly to permanent long-term financing business.

“We’re one of the few banks that does construction really well short term, and can also do long term really well,” Lavrich said. “Hopefully that gives us something a little different than the competition.”

The formula has won over some of New York’s most prolific private builders. One day in January, shortly before Ritter retired, the view from the bank’s conference room gave Ritter and Lavrich occasion to reminisce over some of Helaba’s proudest recent projects. In plain sight was The Durst Organization’s residential Epic project at 125 West 31st Street, happy beneficiary of a Helaba financing during its construction phase fifteen years ago. More recently, the bank has also contributed to a $225 million construction financing for SL Green’s 185 Broadway, a roughly 200,000-square-foot residential and commercial building going up directly above the bustling Fulton Street transit center. Further uptown, other recent loans include a major contribution to Paramount Group’s $1 billion refinancing of 1633 Broadway, a 48-story office tower between West 50th and West 51st Streets.

The bank has repeatedly proven its ability to take on major financings independently as well. In December 2018, it led a $125 million refinancing for Stellar Management’s 752 West End Avenue, a substantial rental tower at the corner of West 97th Street. And that same month, it lent L&L Holding Company $75 million to fund the landlord’s stake in 635 Madison Avenue, an office-and-retail asset on East 59th Street.

But though Helaba’s deal roster dots New York City’s topography from Brooklyn to the Upper West Side, any map of the bank’s Big Apple rise must include Germany. It’s there that Helaba’s classification as a landesbank (we’ll explain in a minute) gave rise to the particular set of circumstances that primed the bank for success in foreign real estate lending.
The story starts with Helaba’s ownership structure. Compared with America’s banking system, a far larger share of German financial institutions are public-sector or quasi-public-sector firms, according to Patrick Rioual, a Frankfurt-based bank analyst at Fitch Ratings.

Landesbanks—the term means “regional banks”—are a set of quasi-public banks administered by each of Germany’s 16 federal states. In each state, the landesbank is responsible for conducting wholesale business on behalf of local savings banks, and offering smaller banks hedging and derivatives products. Helaba is the landesbank for the central states of Hesse and Thuringia, the former of which houses central Europe’s financial capital, Frankfurt. Like that of other landesbanks, ownership of Helaba is split among Hesse and Thuringia regional governments and a consortium of the smaller banks that Helaba serves.

Helaba’s role as a landesbank was crucial when it came to New York City in the 1990s, Rioual said, because it meant the bank had a stellar credit rating.

“We rate all the German regional states AAA, and until about 2002, there was a strong link between the credit rating of the regional state and the credit rating of the landesbank,” Rioual said.

Eventually, the European Commission determined that that particular arrangement gave landesbanks like Helaba an unfair advantage when they increasingly sought more business elsewhere in Europe and oversees. In the mid-2000s, the commission made a deal with the German government that landesbanks would lose their state guarantee—but Helaba had already taken advantage of the low cost of capital that the friendly rating provided to set up shop in the U.S. and start putting out debt.

When Lavrich joined in 2003, he found it a refreshing change of pace from the domestic banks he’d worked for previously.

“The bank was smaller, but it still could do large deals—just with fewer people on staff,” Lavrich said. “We’re also a wholesale bank. U.S. banks are always tasked with cross-selling services, which takes a lot of time. Here, we just lend money, so I can do what I enjoy doing full time.”

Often, that means hobnobbing with a strictly exclusive group of sponsors; the bank has a well-earned reputation for being extraordinarily picky. Geoff Goldstein, a debt advisor at HFF who’s closed a solid book of business with Helaba on behalf of clients, painted the picture of an exactingly disciplined lender.

“Sponsorship comes first,” Goldstein said in an email to Commercial Observer. “The building might have a 15 percent debt yield, [but] if it’s not an operator with a great track record, they won’t pursue the deal.”

Helaba’s financial underwriting preferences are every bit as particular.

“They don’t allow mezzanine financing in the [capital] stack, which requires the injection of 35 percent to 40 percent cash equity in most deals they close,” Goldstein wrote.

Scott Singer, a second-generation executive at The Singer and Bassuk Organization, said that his family’s debt brokerage has been working with Helaba on deals since as far back as the late 1990s. According to Singer, Ritter was fanatical about working with only the most reputed landlords even back then, before the bank had embarked on large-scale construction lending.

“Helaba always had a very high standard for the borrowers they wanted to lend to,” Singer recalled. “That was a perfect fit for our client group, which is a group of the most highly regarded New York City-based owner-developers. We wound up introducing them to a number of our clients.”

Affordable debt—enabled by the bank’s own good credit and access to cheaper capital—grabbed borrowers’ attention. But conscientious attention to client relationships made it easy for borrowers to become repeat customers.

“They provided a very high level of service,” Singer said. “From top to bottom, they had a group that were intelligent dealmakers for whom relationship-building was an important part of the process. They also had attractively priced money, which helps.”

The departure of a celebrated chief is always a critical moment, but the transition has shown every sign of a smooth process. After all, Helaba has never been anything but deliberate, as Ritter himself emphasized.

“We didn’t just go around and build a book really quickly,” he said, summarizing his tenure leading the New York office. “We were always able to take our time.”

“Nobody was rushing into anything—everybody was very carefully approaching this,” he added. “That’s pretty much still the same. The targets we set for ourselves are easily achievable in a regular, healthy market.”

The bank’s real estate business, it seems, is in no danger of changing course. But that’s not to say it’s felt like business as usual in the weeks after Ritter’s departure.

“It was a very sad moment saying goodbye to him,” Francis relayed, about a week after Ritter left. “Rick has moved into [Ritter’s] office, and it’s sort of an unusual feel. I’m sure Rick feels somewhat unusual that he’s there too. It’s not that we don’t have confidence in Rick, but it’s odd transitioning to someone who isn’t Christian.”

Ritter, for his part, is leaving his inclination for fanatical planning behind—at least for now. Shortly before he quit the New York scene at the end of January, Ritter said that his only definite plans for his first months off the job were to fly to the Caribbean, get his hands on a sailboat, and cast off. Destination? Nowhere in particular. After decades of executing a meticulous and outstandingly disciplined lending strategy, that’s got to be a refreshing change of pace.