Oceans & Company's Daniel Schmidt actively participated in the 2018 LMA Real Estate Finance Conference in June 2018, on a panel titled "Spotlight on the German CRE debt market: finding returns in an ever competitive environment".
The panel, chaired by Dr Beda Wortmann, Partner at Clifford Chance debated the shape, trends and prospects of the highly competitive German CRE market. In a lively discussion, the panellists spotlighted various commercial real estate asset classes. A key question was on how to find sufficient returns from both an equity investor's and a lender's perspective. All professionals agreed that CRE investors need to raise the risk curve in order to identify the rare assets with sufficient yield levels that remain in the current market climate. At the same time, the late stage of the real estate cycle leads to more challenging decision-making processes and due diligence requirements. Daniel stressed that investors are still able to engage in profitable projects, especially in the value-add office property segment in more peripheral areas of the TOP 7 cities. A sponsor's proven track record alongside a flawless business plan are the key drivers of a successful transaction. As such, lenders - especially banks - need to adjust their lending behaviour somewhat by accepting more business plan and location related risks.