EgnsINVEST Ejd. Germany explains its financing and interest-rate strategy: Interview with CFO Birk Klinkby

About this update from Egnsinvest Ejendommetyskland A/s

EgnsINVEST Ejd. Germany shared an interview with CFO Birk Klinkby in the latest edition of the shareholder magazine BERL!N.EgnsINVEST Ejd. Germany places strong emphasis on optimizing its debt and minimizing interest-rate risk by choosing the right loan mix. How EgnsINVEST Ejd. Germany does this is highlighted in an interview with the company’s CFO, Birk Klinkby, which you can read below.Could you describe the thoughts and strategy behind the way the company secures financing?Our strategy is composed partly of what we want and partly of the art of the possible. The art of the possible should be understood as the fact that Nykredit is the only provider of mortgage lending in Denmark that we can use to finance properties in Berlin. The other Danish mortgage lenders simply do not have a product on the shelf for financing properties in Germany—more specifically, Berlin. It is not a market they have entered. Of course, it also requires particular expertise to operate south of the border. Nykredit is the only one that has built up that expertise. So we only have Nykredit, which can offer a mortgage loan in euros, which is important to avoid currency risk.Aren’t there any German options?Yes, we also have a German alternative. The reason we have not chosen it is the terms. With German financing, the loans would have to be amortized, and the loans would be non-callable for the entire term. That is not the case with Nykredit. Here we have the option of interest-only periods, and when refinancing we can change the loan profile or redeem the loans without a price loss. This makes us more flexible in terms of adapting the financing to developments in the market and in the company. At the same time, we have the option to fix the interest rate for up to five years with their standard products.You said earlier that our loans with Nykredit are in euros in order to avoid currency risk. Could you elaborate?You should keep your revenue and your loans in the same currency—this is something all economists are taught. Even though Denmark has a fixed-exchange-rate policy against the euro, there is always a latent risk that must be taken into account. Moreover, there is no reason to take that risk, because we cannot gain anything from it. For example, we would not obtain better terms or opportunities with Nykredit or another mortgage credit institution if we took out loans in Dan...

View stock analysis, news, and events for Egnsinvest Ejendommetyskland A/s