DGAP-News: BF.direkt AG: Lending market for commercial properties under pressure


DGAP-News: BF.direkt AG / Key word(s): Real Estate/Financing
BF.direkt AG: Lending market for commercial properties under pressure

03.08.2015 / 10:19

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Lending market for commercial properties under pressure

  - BF.Quartalsbarometer reaches only 1.23 points for Q3 2015 (previous
    quarter: 7.07)

  - Impact of Greek crisis and higher interest rates

  - Competition amongst real estate financers continues to put pressure on
    margins

Stuttgart, 3 August 2015. BF.Quartalsbarometer shows unease on lending
market for commercial properties for the 3rd quarter of 2015. The score of
the trend barometer published for the first time by BF.direkt AG, the
independent specialist for strategies relating to the financing practice
for commercial properties declined to 1.23 points, compared with 7.07
points in the previous quarter. Accordingly, the high-flying sentiment
still prevailing in the 2nd quarter of 2015 took a substantial hit.
Assessments by the experts canvassed ranged from an "investment-friendly"
market in the 2nd quarter of 2015 to a "balanced market". "On the other
hand, the survey was held in the hot phase of the negotiations over Greece;
as a result, this temporary snapshot of the prevailing sentiment can soon
reflect a better picture again," explains Francesco Fedele, CEO of
BF.direkt.

The analysis carried out by bulwiengesa AG, an independent firm of analysts
for the real estate sector, responsible for the survey and evaluation of
BF.Quartalsbarometer, shows that in addition to the Greek crisis, the
sudden surge in interest rates early in May shocked all market
participants, with the possibility of a further increase in interest rates
having a negative impact on overall sentiment. While the finance experts
had anticipated higher interest rates in the previous survey taken, they
had only expected these to materialise at a later date.

According to the current BF.Quartalsbarometer, the portfolio finance level
reflects a slight increase for the first time since the 4th quarter of 2014
- if only by 4 basis points. In contrast, the trend of declining project
finance margins in evidence since the 4th quarter of 2014 has continued in
the 3rd quarter of 2015. It fell by a further 12 basis points compared with
the previous quarter, to a current level of 182 basis points.

"We don't expect a sudden turn-around in the development of margins right
now.  Competition on the market for property loans will continue to put
pressure on margins for the time being," says Fedele. He said that this
would also lead to a higher loan-to-value (LTV) on property and corporate
levels.

This assessment was also confirmed by the development of competition in the
following two years prepared as a current topic of the present
Trendbarometer. "The respondents expect higher financing risks to be taken
as a result of declining margins," explains Prof. Dr Steffen Sebastian, who
holds the chair for property loans at the IREBS International Real Estate
Business School of Regensburg University and scientific consultant of
BF.Quartalsbarometer. Competitive, margin and earnings pressure will
ultimately lead to demand for higher volumes. The survey also reveals that
mergers are under consideration by funding organisations in order to remain
competitive. This is being exacerbated by the increasing market presence of
foreign players and the significance of the capital market especially for
larger market participants.

In the case of demand for alternative lenders, the figure in the 3rd
quarter of 2015 declined slightly in the wake of a high reached in the
previous quarter. Nevertheless, 38 per cent of respondents anticipate
stronger demand for additional form of funding. "In our financing practice,
we can confirm a trend in the direction of alternative lenders. Still,
there is some scope for expansion," adds Fedele.

The instrument BF.Quartalsbarometer issued by BF.direkt AG, the independent
specialist for financing strategies, is an analysis tool established in the
finance market  since 2012 that analyses the funding propensity for
commercial properties in Germany four times a year. Moreover, the
accompanying analysis provides information on new business, asset classes,
expiry dates for loans, and margins. The BF.Quartalsbarometer panel
comprises over 140 experts on the lender side. In addition to conventional
financing entities like mortgage banks, special banks, public-sector and
co-operative institutions as well as private banks, these also include more
recent funding providers like provident chambers/pension funds, insurers,
real estate private equity and credit funds. The analysis enterprise
bulwiengesa is responsible for the survey and the scientific evaluation.

The current report of BF.Quartalsbarometer is available for download
immediately at www.quartalsbarometer.de as well as www.bf-direkt.de.

About BF.direkt
BF.direkt AG is an independent specialist for financing residential and
commercial property projects. As one of the leading finance consultants, it
develops innovative funding strategies and finds matching financing
partners in the process. In this way, customers of BF.direkt stand to
benefit from the numerous connections with big, special and private banks,
capital market services providers, insurers and specialised funds as well
as with investment companies for borrowed funds, mezzanine and private
equity.

www.bf-direkt.de

About bulwiengesa
In continental Europe, bulwiengesa is one of the big, independent firms of
analysts operating in the real estate sector. For over 30 years now, we
have supported our partners and customers with issues relating to the
property sector location and market analyses. We provide well-established
data services, perform strategic consultancy and prepare individually
tailored expert opinions. Our principals include project and property
developers, institutional investors, banks, municipalities, and portfolio
managers.

www.bulwiengesa.de

Contacts 

BF.direkt AG
Manuel Köppel
Tel.: +49 711 22 55 44 136
E-mail: m.koeppel@bf-direkt.de

BF.direkt PR-Kontakt
GFEI Aktiengesellschaft
Tel.: +49 511 47 40 23 10
E-mail: BF-direkt@gfei.de

Bulwiengesa AG
Andreas Schulten
Tel.: 030-278768-0
E-mail: schulten@bulwiengesa.de

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BF.direkt AG
Leuschnerstrasse 12
70174 Stuttgart

BF.direkt AG
Headquartered in Stuttgart - AG Stuttgart, HRB 20834; member of the Board
of Directors: Francesco Fedele
Chairman of the Supervisory Board: Dr Peter Maser, attorney-at law
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383049 03.08.2015