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28. November 2011 
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Launch of "Distressed Real Estate Debt” Research Cooperation
Approximately 1.4 trillion Euros worth of global distressed assets are being marketed, while another 1.2 trillion Euros of commercial real estate mortgages worldwide are due to mature over the next four years, with approximately 500 billion Euros in Europe and 125 billion Euros in Germany alone. These are results of the “Distressed Real Estate Debt” Research Cooperation of EBS Remi and Corestate Capital AG.
"Banks have severely cut back on credit financings and focus, if any, on low-risk lending. This trend is set to accelerate further and will lead to a sharp increase of non-performing real estate assets. Banks are not capable of covering financing demand due to the capital requirements they are facing. Real estate debt, as we know it, is in the past and no one knows what implications this has for the real estate market (The New Normal),” said Ralph Winter, Founder and Chairman of Corestate Capital AG. These developments have been driven by lending restrictions of banks who, in order to ensure their own economic survival, are either avoiding loan extensions or are making them subject to increased equity contributions or much higher risk premiums. “The main aim of our research cooperation is to analyse the upcoming wave of distressed real estate debt and to provide transparency which will help the real estate industry cope with the greatest financial crisis since World War II.” “The “Distressed Real Estate Debt” research cooperation went live on 1 November 2011, in order to analyse the parameters of the market for distressed real estate assets and non-performing loans, to predict future developments, and to investigate the problems emerging on the ground,” stated Prof. Dr. Nico B. Rottke, Founder and Head of the Real Estate Management Institute at the EBS University of Economics and Law. He went on to announce the delivery of the first results in the first quarter of 2012. “Incipient approaches toward a solution that have crystallised so far include the formation of a transparency culture, the development of internal stabilisation programmes, and the endorsement of a pro-active value added approach.”
Experts attribute the current situation to the low interest rate financing that was available in investment markets for many years. For instance, the major central banks boosted private consumption and investments in their respective national economies by keeping interest rates low, and facilitated the net debt of private households to soar as a result. Moreover, the bursting of the US real estate bubble in 2007 triggered a successive shift of private to public debt. “Many countries on the periphery of the European economy such as Greece, Portugal or Ireland proved unable to cover this debt load, thereby causing the sovereign debt crisis in the Eurozone. This has resulted in the fundamental restructuring of the global capital markets through regulatory measures such as Basel III, Solvency II or the Tobin tax currently under discussion that will impose higher capital requirements for financial institutions and insurance companies,” observes Rottke. “As a result, these institutions are forced to raise additional equity through asset sales, whereas governments are in turn trying to reduce their debt by selling assets. Distressed assets are the consequence of these trends, and they will shape the real estate investment environment for the foreseeable future.”
"Banks have severely cut back on credit financings and focus, if any, on low-risk lending. This trend is set to accelerate further and will lead to a sharp increase of non-performing real estate assets. Banks are not capable of covering financing demand due to the capital requirements they are facing. Real estate debt, as we know it, is in the past and no one knows what implications this has for the real estate market (The New Normal),” said Ralph Winter, Founder and Chairman of Corestate Capital AG. These developments have been driven by lending restrictions of banks who, in order to ensure their own economic survival, are either avoiding loan extensions or are making them subject to increased equity contributions or much higher risk premiums. “The main aim of our research cooperation is to analyse the upcoming wave of distressed real estate debt and to provide transparency which will help the real estate industry cope with the greatest financial crisis since World War II.” “The “Distressed Real Estate Debt” research cooperation went live on 1 November 2011, in order to analyse the parameters of the market for distressed real estate assets and non-performing loans, to predict future developments, and to investigate the problems emerging on the ground,” stated Prof. Dr. Nico B. Rottke, Founder and Head of the Real Estate Management Institute at the EBS University of Economics and Law. He went on to announce the delivery of the first results in the first quarter of 2012. “Incipient approaches toward a solution that have crystallised so far include the formation of a transparency culture, the development of internal stabilisation programmes, and the endorsement of a pro-active value added approach.”
Experts attribute the current situation to the low interest rate financing that was available in investment markets for many years. For instance, the major central banks boosted private consumption and investments in their respective national economies by keeping interest rates low, and facilitated the net debt of private households to soar as a result. Moreover, the bursting of the US real estate bubble in 2007 triggered a successive shift of private to public debt. “Many countries on the periphery of the European economy such as Greece, Portugal or Ireland proved unable to cover this debt load, thereby causing the sovereign debt crisis in the Eurozone. This has resulted in the fundamental restructuring of the global capital markets through regulatory measures such as Basel III, Solvency II or the Tobin tax currently under discussion that will impose higher capital requirements for financial institutions and insurance companies,” observes Rottke. “As a result, these institutions are forced to raise additional equity through asset sales, whereas governments are in turn trying to reduce their debt by selling assets. Distressed assets are the consequence of these trends, and they will shape the real estate investment environment for the foreseeable future.”
