Commerzbank fire sales 'not on the cards'

Fire sales of Commerzbank's non-core real estate assets are 'not on the cards', Stefan Otto, head of ship financing at Commerzbank, told PropertyEU, following the news that the German lender is pulling out of commercial real estate financing altogether.

The decision to wind up the property lending business means these activities - together with the bank's ship finance business - will be transferred to the newly created 'non-core assets' division for disposal.

Commerzbank has already earmarked EUR 131 bn of assets for disposal, including EUR 31 bn in non-core real estate, EUR 4 bn in non-core residential and EUR 96bn in public finance.

A Commerzbank spokesman told PropertyEU that further details concerning real estate sales will be made available on 9 August when the lender publishes its results for the first half of the year.

Commerzbank's real estate lending arm Eurohypo will now be renamed Hypothekenbank Frankfurt, likely effective end-August, after a former predecessor institute, with its European loan portfolio set to be dismantled in order to meet European Commission requirements to wind up the lender. Eurohypo recently sold a $760 mln performing loan portfolio in the US to US Bancorp, Wells Fargo Bank and the Blackstone Group. The portfolio comprised 13 loans backed by office, retail, multi-family and industrial assets across the US.

Eurohypo’s non-strategic loan portfolio, such as its US loan book, is performing, so this could appeal to strategic buyers such as US banks. European private equity groups might also be interested, although they would expect a massive discount. Eurohypo’s non-performing loan book is also likely to appeal to private equity groups, although many are struggling to get financing in the current climate.