Banks favour extension to loan sales in 2013, research shows

Fewer non-performing real estate loans than last year are expected to come up for sale in the German market in the near future, according to Corestate/EBS REMI's latest survey on distressed real estate.

The shift in parameters such as gearing ratio, debt maturities and financing volumes suggest that banks currently prefer to extend their loans rather than dispose of them.

At the same time, fewer banks are expanding their new business in the German market, according to the research, a joint effort of Corestate Capital and the Real Estate Management Institute (REMI) of the EBS University for Economics and Law.

'The present opportune interest rate is certainly one reason for the low number of distressed real estate portfolios currently on the market. Banks are provided with an abundance of capital since the European Central Bank announced its bond-buying programme. Therefore, the pressure on banks to sell their non-performing loans has decreased,' commented Ralph Winter, founder of Corestate Capital.

The research focuses on assessing the current financing sentiment in the real estate market from the banks’ perspective.

'This year's survey shows how significantly the sentiment in the market can change within one year,' added Nico Rottke, founder and head of the Real Estate Management Institute.

Almost 60 CEOs, CFOs, and managing directors from 32 commercial real estate financing institutions received the questionnaire. The total assets of the banks participating in the poll add up to approximately €2.56 tln, representing 72% of the assets of all CRE financiers based in Germany.