What are some of the popular financing/refinancing structures in Germany, particularly where foreign buyers are concerned?

Here in Germany you find mortgage-backed loans are the most typical financing method for 50 per cent of developments and as much as 100 per cent of deals for existing buildings.

There are a variety of other players senior or junior debt other than banks. Insurance companies are struggling to achieve sufficient yields, so they are very interested in real estate finance. Bond finance is also available, with plenty of players offering bond issuing services.

There are also mezzanine structures present in the market, and we have seen joint ventures design investment in this way. Investors from abroad find themselves subject to taxation in Germany as joint venture partners, so they are putting money into real estate projects and restructuring on an equity level.

Banks are struggling in Germany as there is negative interest for savings and lots of equity in the market looking for property investments. As a result, those banks have become very aggressive in attempting to get their projects positioned, offering higher leverage than once was the case. Leverage of up to 80-90 per cent is something borrowers can achieve.

There are almost no non-performing loans in the German real estate market, which is seen as a safe haven world- wide. You see money coming in from institutions and high net worth (HNW) individuals all over the world wanting to invest into the German property market, which is really experiencing an outstanding growth phase.

Read the full Virtual Round Table Series from the IR Real Estate Working Group here.