Buoyant Sentiment Fades Among Commercial Real Estate Lenders

BERLIN, April 27, 2015 /PRNewswire/ --

In the wake of the record level registered in Q1, sentiment among commercial real estate lenders in Germany has simmered down slightly. During Q2 2015, the FAP Barometer returned a record score of +2.04 points, a decline by 0.83 points quarter on quarter (Q1: +2.87 points). Reasons for the downtrend include narrowing spreads and a dip in new lendings.

The buoyancy over new lendings that had characterised survey responses in Q1 - with nearly 58 percent of the lenders reporting a rise in new business - has faded, as the share of respondents still seeing lendings on the rise dropped to 45 percent in Q2 2015.

Curth-C. Flatow, Managing Partner of FAP, commented: "Apparently, things are getting back to normal. The high expectations vested in the real estate business of 2015 no longer define the sentiment of market players, as they have shifted their focus back to the day-to-day business."

Spreads in inventory financing range from 65 to upward of 525 basis points, while the mean spread is 147 basis points (previous quarter: 158 bps). The LTV ratios range from 50 to 100 percent, while the benchmark ratio across financing and property types remained at 71 percent.

Spreads in property development financing go as high as 300 basis points, the mean spread being 192 basis points (previous quarter: 201 bps). The LTV ratios range from 50 percent to 100 percent, with the benchmark ratio unchanged quarter-on-quarter at 72 percent.

Investment spreads have dropped by more than 27 percent since early 2014, and spreads in development financing by more than 14 percent.

Download FAP Barometer Q2/2015 quarterly report:

http://www.fap-finance.com/en/barometer/  

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Tobias Frank
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SOURCE Flatow AdvisoryPartners (FAP)