Oceans & Company continued the firms sucess story in 2020 with its broad service offering in the business lines of Investment Management, Real Estate Finance, Asset Management & Investment Advisory despite a highly challenging economic environment.
Oceans & Company advised on EUR 2bn of transactions in 2020
The business model of the firm – the advisory service of complex non-core real estate transactions with an interlinked team of specialists of different backgrounds – showed strong resilience against the economic distortions evoked by the Covid 19 pandemic.
With a total transaction volume of approx. EUR 2bn and total assets under management of approx. EUR 750m, the team was faced in 2020 with far more special situations where a holistic approach across all business lines was required for the benefit of the client’s needs.
Real Estate Finance
Oceans & Companies Real Estate Finance team continued with their strong track record in 2020. Nearly EUR 1,5bn of transaction volume was executed with EUR 750m of debt across the capital stack comprising of senior, mezzanine and whole loan financing.
The team advised on 16 transactions with an average LTV of 51%, an average debt volume of approx. EUR 50m in the asset classes: office, residential, student housing, co-working, logistics & hotel throughout Germany and across all risk-classes.
Overall, clients were confronted with distortions in credit supply. Established lenders showed a reduced risk appetite und even partly retracted from the financing of real estate usages which were exposed to the Covid 19 pandemic, especially hotel and retail.
As a consequence, the team dedicated more effort to identify and implement active debt providers and viable financing structures. More than in previous years, special situations gained importance such as bridge and corporate lendings as well as back-up facilities, which provided clients with the security needed to enter into transactions.
Investment Management/Asset Management
In 2020 Oceans & Company managed assets with a total value of approx. EUR 750m as a service provider. The environment was extremely challenging in a lacklustre letting market with little tenant demand due to a) companies needing to adapt their own operations and processes before renting new premises, b) travel restrictions which made site visits temporarily impossible and c) uncertain economic outlook.
Therefore the team focused on value creation through tenant interviews, marketing initiatives as well as the planning and execution of capex measures in order to make sure that the buildings will be competitive in their markets in 2021/2022.
For the new business Investment Management, the acquisition team looked at transactions of around EUR 1bn and is following investment opportunities for 2021 of EUR 500m.
Investment Advisory
The Investment Advisory team advised on successful transactions totalling approx. EUR 450m in the asset classes of office and data-centre with risk profiles ranging from core plus to value-add.
A number of potential deals of a further EUR 350m the team was working on were postponed due to the Covid 19 pandemic, all in the risk classes value-add to opportunistic. With the start of the pandemic, uncertainty resulted in an immediate disconnect between the pricing expectations of buyers and sellers for non-core real estate assets. We expect another 9-12 months until supply and demand return to an equilibrium with increasing investment volumes.
Outlook 2021
Oceans & Company expects another challenging year for the German Commercial Real Estate Markets, especially in the non-core sectors. The main cause is the delay of the execution of the vaccination plan in the EU, which will not lead to a positive effect before Q3 2021. Therefore, the market has longer than expected to deal with global restrictions and persisting negative economic effects for 2021 and beyond.
The letting markets in Germany are going to stay weak and investment markets will be negatively influenced by the unclear economic outlook and the uncertain tenant demand (resulting from adapted operations and processes in reaction to the pandemic).
The firm is starting 2021 with a pipeline of EUR 1bn in Real Estate Finance and a transaction pipeline of approx. EUR 850m in Investment Advisory and Investment Management.
Oceans & Company is a multidisciplinary real estate consulting firm with business units in Asset Management, Real Estate Finance, Investment Advisory and Investment Management. The company has extensive expertise in all types of real estate use and risk profiles, and is distinguished by its complex re-positionings of commercial real estate.