CBRE to offer ‘one-stop shop’ refinancing tool

CBRE is setting up a German platform for Schuldscheindarlehen, or promissory notes, to offer clients a ‘one-stop shop’ refinancing tool, Dirk Richolt, head of real estate finance at CBRE in Germany, told PropertyEU.

CBRE will operate the new platform in collaboration with Coreal Credit, a Frankfurt-based bank owned by US private equity group Lone Star.

‘It’s a major refinancing tool, which has the added bonus that there’s no red tape involved, unlike CMBS. Although it’s similar in some ways to CMBS, there are some crucial differences,’ Richolt said. ‘Firstly, it’s a loan, as opposed to a security. As such, it’s driven by collateral value; it doesn’t need a rating. It also makes it easier to pass on credit collateral,’ he added.

Unlike the CMBS market, which virtually disappeared in Germany during the financial crisis, Richolt says that promissory notes (or bondable loans, as they are also known) are historically more stable: ‘We think they’re very reliable - through all property cycles, both good and bad.’

The tool is likely to appeal to clients who are looking at volumes of €10 mln or less, Richolt said: ‘We have seen that insurers are very keen to get into this - it’s perfect for them and for small savings banks as it allows them access to ‘pieces’ of €10 mln or less,’ Richolt added

Another advantage for investors is that because the promissory notes are not securities, there is no need for investors to do a ‘mark to market’ to determine their fair value.