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Management report – münchener Hypothekenbank eg l annual Report 201250 core properties and properties in “B” locations will continue to widen, especially in Great Britain, although not as strongly as in 2012. At best, rental prices in European property markets are expected to post slight growth in 2013. The peak price development in comparatively robust national economies will continue to become less dynamic. Further declines in rental prices can be expected in countries that have been hit hardest by the European sover- eign debt crisis. The outlook for commercial core property markets in the USA is favourable, with above-average growth in job centres like San Francisco and Houston. However, whether this trend con- tinues will depend strongly on further economic development in the United States. Demand is expected to remain weaker in the secondary markets. Development of business at Münchener Hypothekenbank We want to continue our previous growth course and gradually develop our market position in 2013 and beyond. The related strategic objectives are: increase earnings on a sustained basis, realise potential opportunities to raise efficiency, and control existing risks. The central focus of our growth course is residential property financing in Germany. The banks in the Cooperative Financial Network, primarily the Volksbanken and Raiffeisenbanken, remain our most important partners in this segment. We will further intensify and expand our collaboration with them. In the past, the cooperative banks have been able to steadily expand their market share of the residential property lending sector in Ger- many. According to BVR market research, our cooperative part- ner banks should continue to see above-average growth in 2013 due to the high level of trust that they enjoy from their customers. This unlocks opportunities for us to expand our busi- ness within the Cooperative Financial Network as planned. We plan to further expand the volume of new business we gen- erate together with independent financial service providers over the next two years. Our cooperation with Swiss PostFinance will also be further developed. Since interest rates for residential property financing are expec ted to remain at a low level in 2013, we anticipate that 20-year or longer mortgages with fixed interest rates will be in high demand. We consider ourselves to still hold an unchanged strong position in this segment. “We want to continue our previous growth course and gradually develop our market position in 2013 and beyond.” We plan to slightly expand our volume of new business in the commercial property financing business. We primarily want to acquire this new business in Germany. About one-third of the volume will come from international business, especially in France and Great Britain. The focus will remain on direct and syndi- cated loans with mainly institutional customers and professional private investors. We assume that longer fixed-interest terms will continue to be in demand in this business area as well. This mainly applies to the residential property market where longer terms are the norm. We also plan to continue financing larger housing port- folios in Germany in this segment. Housing companies with a need for relatively low loan-to-value financing, as well as insti- tutional investors requiring higher volumes of financing, remain the focal points of this segment. We expect to see lively demand here. Our lending business with the public sector and banks will con- tinue to contract, as it only plays a supporting role. Our level of activity in this area of business will depend on the further development of the European sovereign debt crisis in 2013. We are planning to cover about 75 percent of our refinancing needs in 2013 by issuing Pfandbriefe. In case of an unchanging high level of investor interest, at least one jumbo transaction and several benchmark issues with volumes of at least 500 mil- lion euros each are conceivable this year. Refinancing will be supplemented by tailor-made private placements. Due to the large volume of maturing German Pfandbriefe, and the antici-