RUECKERCONSULT
When around 130 real estate finance professionals gathered in Berlin on 23 April for the Real Asset Finance & Debt Summit — organised by BF.direkt, IREBS and RUECKERCONSULT — the mood was sober but engaged. The conference, which began a decade ago in Frankfurt before relocating to Berlin, has evolved steadily alongside the market it serves. This year's expanded programme, covering debt, infrastructure and defence financing alongside traditional real estate topics, reflected just how much the landscape has shifted.
Nowhere was that shift more starkly framed than in the panel discussion entitled "Restructurers: White Knights or Vultures?" — a title that René Doeubler of Drees & Sommer had deliberately leaned into during his warm-up presentation, projecting an image of the Leichenfledderer before promising, with a wry smile, that a more constructive message would follow. It did. But only just.
Rising water, not breaking waves
Before the panel proper got under way, Carsten Demmler, CEO of HIH Invest had set the scene with some arresting numbers. His team has been tracking refinancing volumes across five-, seven- and ten-year loan maturities for several years. The conclusion: in the next four years alone, around €150 billion in real estate financing falls due for refinancing across Germany. This year, he calculates a refinancing gap — the difference between what needs refinancing and what the market can realistically absorb — of €6 billion. Debt funds cannot simply plug it: at a margin of only 100 basis points above the benchmark, no debt fund can make the economics work. Meanwhile, assets financed at below 1% in 2020 are now facing refinancing costs of 4% to 4.5% — a near-quadrupling of the interest burden, and that is before factoring in the significant write-downs many properties have absorbed in recent years.
Annette Benner, who moderated the session, came to the table with formidable credentials of her own. As a partner at GT Restructuring and Managing Partner of Nova Fides GmbH — a firm specialising in the management and rescue of distressed commercial loans — she was no neutral chair. Her opening question was pointed: where exactly are we in the cycle? The panel's answer was consistent, if uncomfortable. "We are in the first quarter," said Demmler. Not the beginning — too much has already happened for that — but nowhere near the end either. Doeubler reached for a different metaphor. He pushed back on the industry's habitual talk of a wave, which implies a crest and a resolution. "This is more a case of rising water levels," he said. "Even those standing on the bank already have wet feet."
Multiple crises, not one
What makes this cycle particularly demanding, the panellists agreed, is its sheer complexity. There is no single lever to pull. Rising construction costs and rising wage costs have rendered many projects unviable. B- and C-locations, which once offered acceptable returns, no longer function in many markets. Tenant insolvencies are beginning to appear — including, Demmler noted candidly, in the logistics sector, where demand from defence-related occupiers is providing some cover but masking a broader deterioration.
Frank Schrader, Head of Real Estate Finance at Deutsche Hypo — NORD/LB Real Estate Finance, brought the banking perspective with characteristic directness. At Deutsche Hypo's corporate client events, he said, every chief executive and board member has been telling him the same thing for three or four years: in an economy with zero growth, the only strategy is to cut costs by 10% each year just to retain credibility with shareholders. "That does not generate demand," he said. The investors who were buying German real estate before 2022 are still sitting on deeply problematic positions that have not been repaired. And with a risk-free rate on ten-year Bunds now around 3% and trending towards 3.5%, the era of factor-20 and factor-22 valuations is over. Factor 18 is the new normal — and that means some of those who have survived in project development until now face massive problems ahead.
The regulatory straitjacket
Schrader was particularly forthright on the regulatory dimension. Under ECB rules, he explained, banks have been left with almost no discretionary room. A borrower who simply asks to postpone a property valuation by one month — say, because a lease has just expired and a new one is a month away — is technically filing a waiver request. If the loan officer declines it, the borrower acquires a rejected waiver: one of the criteria for being classified as a restructuring case. If, at the same time, the bank's own valuer has assessed the property conservatively and the LTV comes in above 85%, the borrower finds themselves in a Sanierungsfall — regardless of whether rent is still being paid and everything appears operationally sound. "Your new relationship manager is the restructuring department," said Schrader. "That is practice."
He also flagged a longer-term structural issue. Under the new Basel rules, due to take full effect from 2032, project development loans will have to be treated on bank balance sheets as effectively defaulted credit. "Project development will either become dramatically more expensive, or it will simply no longer appear on bank balance sheets," he said. The question for regulators, he added, is whether that is actually what they intend.
The trust matrix
Doeubler's contribution was more philosophical but no less pointed. The industry, he argued, still lacks genuine awareness of the breadth of the forces pressing on it simultaneously — monetary policy, regulation, geopolitical shocks, the daily news ticker. He described his team's working tool as a Vier-Felder-Matrix: on one axis, the state of the trust relationship between lender and borrower; on the other, the viability of the underlying project. The crucial insight is that even a perfectly viable project cannot be rescued if the trust relationship has broken down. And by the time most advisers are called in, it usually has. "The moment you no longer believe what the sponsor is telling you," he said, "you are already asking a third party."
His core message was that restructuring requires sequencing: capital structure, legal structure, the right people — and only then, strategy. Shortcuts don't work. "If you don't want the white knight, you get the vulture."
The view forward — and a note of optimism
Six weeks ago, said Schrader, he would have said the worst was passing. Then came the renewed turbulence on global bond markets and the fresh uncertainty around US trade policy. He now expects distressed volumes to increase significantly. Demmler agreed: not exponentially, but a solid pipeline for at least two to three years. Doeubler was more sombre, noting that he sees no real Weichenstelle — no genuine switching point that could shift the German economy onto a different track. Rheinmetall alone, he observed drily, will not fix it.
Benner drew on her own advisory practice to make a structural point that often gets overlooked: when a junior creditor refuses to cooperate, the most effective remedy available is frequently a Zwangsversteigerung — a forced auction. In her experience, properly prepared and well-marketed, these produce better results for senior lenders than the market typically expects.
The session closed on an unexpected note of genuine optimism — delivered not about domestic investors, but about foreign ones. In Q1 of this year, Demmler noted, half of all transactions in the German real estate market were funded by capital from abroad. Canadian investors, wary of the US market, are looking to Europe. Enquiries from the Middle East have risen sharply in the past six weeks. "The foreign investor has a far more positive view of Germany and Europe than we do ourselves," said Demmler. "They see legal certainty. They see reasonable valuations. This market is not yet liberating for them — but it will be."