SONAR Real Estate/Envato/REFIRE
Christoph Wittkop, CEO, SONAR Real Estate
German transaction volumes are muted, debt restructuring cases are rising, and asset managers are pivoting to new strategies to maintain revenue. Against this backdrop, REFIRE sat down with Christoph Wittkop, CEO of SONAR Real Estate, to better understand how companies are adapting and positioning themselves in a shifting distressed asset market.
One key takeaway from our discussion was the growing importance of integrated asset and property management services. SONAR Real Estate, historically an asset manager, has expanded its capabilities to include property management—a move Wittkop sees as both strategic and necessary.
“Many investors aren’t allowed to hire asset managers directly, but they still need the expertise,” Wittkop explains. “That’s where ‘property management plus’ comes in. It allows us to provide essential asset management functions under a property management mandate, offering a solution to institutional investors restricted by formal investment structures.”
Growing numbers of workout cases
The shift responds to a growing number of workout cases, where distressed owners cede control to lenders, insolvency administrators, or mezzanine financiers. The ability to provide a one-stop-shop service—covering both property and asset management—helps position SONAR as a key partner in navigating complex restructuring scenarios.
An integrated model also brings practical advantages in decision-making and execution. “When asset and property management are aligned under one roof, we reduce inefficiencies, improve response times, and create a much closer connection between investment decisions and on-the-ground operations,” says Wittkop. “This ensures that capital allocation, tenant strategies, and refurbishment plans are all executed with a unified vision.”
SONAR’s expansion into property management has been reinforced by strategic growth initiatives. In 2023, the firm acquired the Berlin-based asset management team of CILIX Asset Management, integrating property management expertise and broadening its reach. The move expanded SONAR’s assets under management to over €3.3 billion across 142 properties, enhancing its ability to handle complex mandates while increasing its presence in Berlin.
“This acquisition strengthens our ability to provide asset and property management from a single source where needed,” Wittkop notes.
Banks' reluctance to take ownership of distressed properties
The restructuring of distressed properties remains slow-moving, largely because banks hesitate to take direct ownership. “Many lenders would rather take a large write-down on their loan than become landlords themselves,” Wittkop notes. “They simply don’t have the expertise to handle distressed real estate effectively.”
This hesitation creates opportunities for firms like SONAR, which can step in to manage troubled assets on behalf of lenders. “We’ve already taken over management of properties where the original owner has been forced out,” Wittkop explains. “That includes an office-to-residential conversion project where the developer went insolvent—we were brought in to complete the transition.”
Opportunistic investors, particularly from the Anglo-Saxon market, are waiting for further price corrections before entering. “The expectation is that banks will eventually be forced to accept deeper discounts,” says Wittkop. “There are already signs of increased pressure on lenders, and as refinancing deadlines approach, we expect capital to start moving much more rapidly.”
With more such cases expected in the next two years, demand for competent, full-service property and asset management providers is set to rise.
A compelling entry point for office investors?
Not all real estate sectors are equally affected by the downturn. Office assets remain the most problematic, particularly for owners who bought at peak valuations and now struggle to refinance. By contrast, the logistics sector has corrected more quickly and remains more stable, while food retail assets continue to attract investor interest.
“For those who still believe in office real estate, now is a compelling entry point,” Wittkop suggests. “The risk premium has increased significantly, and while some investors remain hesitant, those entering now at today’s pricing will likely be making a good long-term decision.”
Retail remains a mixed picture. Supermarket-anchored retail parks and standalone food retail remain resilient, with rising rents and strong investor demand. However, traditional shopping centres and high-street retail continue to struggle, with structural headwinds from e-commerce and shifting consumer behaviour.
The hotel sector, meanwhile, has rebounded faster than many expected. “Operational performance has improved significantly, and institutional investors are showing renewed interest in prime hotel assets,” says Wittkop. “However, distressed hotel sales are still presenting opportunities for specialist buyers.”
Benefits of integrated property management
With uncertainty still high and transaction volumes sluggish, integrated asset and property management is becoming increasingly central. Having both functions under one roof enables faster decision-making, better alignment with investor objectives, and more efficient execution of business plans. As more distressed assets change hands, investors will need partners who can navigate operational complexities while preserving asset value.
“The coming months will present challenges, but also opportunities for those who are well-prepared,” Wittkop concludes. “Having the ability to deliver integrated solutions will be a key differentiator in managing distressed assets and repositioning properties for the future.”
Germany remains a major global investment destination, but investors are taking a more selective approach, seeking clear risk-adjusted returns before committing capital. Upcoming policy shifts, interest rate trends, and economic stabilisation measures will be pivotal in determining market direction. While some investors remain cautious, others are already making moves, recognising that distressed assets acquired today could define tomorrow’s outperformers. As the market rebalances, those with the right expertise and operational agility should be best placed to seize opportunities and drive long-term value.