Corpus Sireo eyes growth from rise in German NPLs in 2013

Demand for German asset management skills is set to increase significantly in the coming years due to the expected rise in non-performing loans in the country's commercial real estate market. That is one of the key conclusions of a market analysis conducted by Corpus Sireo, one of Germany's leading real estate asset management companies.

In 2013 alone, Corpus Sireo estimates that the volume of debt coming up for renewal from German NPLs and where new asset managers may be appointed will exceed EUR 3 bn.

The total of commercial real estate financings in Germany that will mature between now and 2016 is more than EUR 100 bn, the company said. Of this total, approximately EUR 60 bn will fall due in the next two years.

Tim Brückner, client group leader for financial institutions at Corpus Sireo, pointed out that the majority of real estate securitisations will mature next year. 'We are anticipating a sum exceeding EUR 12 bn 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.'

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.

Ingo Hartlief, CEO of Corpus Sireo Asset Management, claims 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 and 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.'

Cologne-based Corpus Sireo has more than EUR 15.9 bn in assets under management covering a total of 14.9 million m² of commercial and residential property space. The company employs 560 at 11 locations in Germany and Luxembourg.