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BF.direkt AG
BF.direkt AG: Lending market for commercial properties under pressure
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BF.direkt AG / Key word(s): Real Estate/Financing 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. 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. Contacts BF.direkt AG BF.direkt PR-Kontakt Bulwiengesa AG ——————————————————- BF.direkt AG 2015-08-03 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. 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