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CORPUS SIREO Expects Market Potential of Non-Performing Real Estate Loans to Exceed Three Billion Euros
By: PR Newswire
Nov. 20, 2012 07:27 AM
FRANKFURT, Germany, November 20, 2012 /PRNewswire/ --
The volume of debt from non-performing loans coming up for renewal in 2013 on Germany's commercial real estate market will exceed three billion Euros. This is the upshot of in-house studies and detailed market analyses conducted by CORPUS SIREO, Germany's biggest real estate asset management service provider.
The sum total of commercial real estate financings in Germany that will mature between now and 2016 is more than 100 billion Euros. Out of this total, approximately 60 billion Euros will fall due in 2013 and 2014. The formerly wide-spread practice of banks to shoulder debt rollovers or debt rescheduling even in difficult situations will not be an option in many instances, given the enormity of the sum.
Tim Brückner, Client Group Leader Financial Institutions at CORPUS SIREO, had this to say: "The majority of the real estate securitisations will mature next year, and we are anticipating a sum exceeding 12 billion Euros in Germany. This will raise the pressure on the original investors to identify solutions for the securitised financings. If this effort fails, it will be the servicers' job to pave the way for an orderly wind-up of the securitisation structures."
In addition, the ability of the commercial banks to front new financing arrangements or to extend existing ones will be limited. This situation will coincide with a rise in the NPL volume. As a result, the overall demand for asset management solutions will increase. This view matches the estimates ventured by industry insiders, who expect outside help for about a quarter of all distressed financings. All things considered, CORPUS SIREO believes that more than 3 billion Euros worth of commercial real estate portfolios in Germany will be taken over by new asset managers in the medium term.
International investors are also showing great interest in the German real estate market. In addition to direct and indirect real estate investments, they are expected to step up their commitments in the area of mortgage-backed NPLs. A look at other countries in Europe suggest as much. If you take, for instance, the trading volumes in the United Kingdom, whose NPL market is roughly the same size, increases in Germany seem likely against the background of the general market trend. On top of that, a total of more than 60 billion Euros in foreign capital is available for acquisition - including in the area of corporate real estate NPL. For the required local market know-how, investors will rely on large, experienced providers of real estate asset management services in Germany.
Said Ingo Hartlief, CEO of CORPUS SIREO Asset Management GmbH: "The developments on the German market for non-performing commercial real estate loans will produce a growth market for asset managers. The properties behind such loans are usually not prime assets, but distressed properties well away from the metropolises are in dire need of management. Only a hands-on effort directly on location, with a professional, experienced asset management in place on the next tier, will be able to restore the marketability of such properties. Banks and financial service providers prefer not to develop this specialised type of expertise because it is only temporarily required and because experienced contractors who provide this service are readily available."
Yvonne Hoberg, Tel. +4922139900120, Yvonne.Hoberg@corpussireo.com
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