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German commercial real estate is approaching the busiest refinancing year of the current cycle, with more than €40bn in loans maturing in 2026 — and most of that debt was priced when interest rates were a fraction of today's levels. The resulting financing gap could exceed €6bn this year alone, according to new research presented at a RUECKERCONSULT webinar last week.
Prof. Dr Felix Schindler, Head of Research & Strategy at HIH Invest, modelled the scale of the problem using transaction data stretching back to 2014. Loans maturing in 2026 carry an average interest rate of just 1.08%. Refinancing today, with ten-year swap rates near 3% plus a typical 100 basis point margin, pushes financing costs towards 4% — roughly three percentage points higher than when the original loans were written.
Schindler's worked example shows what that means for loan-to-value ratios. Take an office property bought at a 3% net initial yield, valued at €12,000 per square metre, with 50% leverage. Even assuming 10% rental growth, a market yield shift to 4.5% cuts the capital value to €8,800 per square metre — a loss of more than 25%. The bank's €6,000 of debt stays fixed, but equity absorbs the entire loss, falling to €2,800. Loan-to-value jumps from 50% to 68%, often breaching covenants and forcing borrowers to inject fresh equity at refinancing.
Office and residential account for the largest share of the financing gap because they dominated transaction activity during the era of ultra-low interest rates. Logistics and retail are less exposed, partly because rental growth in both sectors has stayed stronger, giving lenders more comfort on future cash flows.
Yet several panellists argued that the refinancing gap itself is no longer the central issue. The more important question is which assets remain financeable at all.
Stefan Hoenen, Head of Commercial Real Estate at Hamburg Commercial Bank, pushed back against the widespread view that 2026 represents the peak refinancing year. In his view, many lenders are not yet confronting troubled positions directly. Instead, banks are increasingly relying on amend-and-extend structures — sometimes paired with a "bridge to exit" — that push maturities further out rather than resolving the underlying equity shortfall. "The maturity wall is something we'll be dealing with for a good while yet," he said, adding that this is "by no means" close to easing.
Financeable and non-financeable
Hoenen argued that the market is increasingly splitting into two camps. Prime, liquid assets continue to attract debt with relative ease. Everything else faces a much harder path, and some assets, he suggested, are simply no longer financeable under today's lending criteria. The refinancing challenge is therefore becoming concentrated in a shrinking portion of the market rather than spread evenly across the sector.
Torsten Hollstein, CEO at CR Investment Management, described the dynamic as mounting pressure with nowhere to release it. Unlike the global financial crisis, today's distressed exposure is not packaged into homogeneous non-performing loan portfolios that can be traded in bulk. Financing structures now involve more parties, each with different incentives, making resolution slower and more piecemeal.
A structural divide between bank lenders and capital-markets-funded institutions is compounding the problem. Anglo-Saxon lenders financed through bond markets can crystallise losses and refinance quickly. German banks funded through deposits — savings banks, cooperative banks and Landesbanken — mostly lack that option. Writing down a single bad loan would force comparable markdowns across their wider portfolios, a hit few balance sheets are prepared to absorb.
Fabio Carrozza, head of sales at BF.direkt, highlighted the dilemma bluntly. If a lender would not finance an asset today under current market conditions, he argued, the question becomes why that asset is still being carried at yesterday's valuation. He pointed to one senior-debt example reported in the trade press where the recovery shortfall reached 40% — a scale of loss that helps explain why recognition remains slow.
Hoenen estimated that only a relatively small share of the market qualifies as genuinely fungible, leaving a large residual trapped on bank and investor balance sheets. That same bifurcation is creating opportunities for alternative lenders. Carrozza noted that debt funds are increasingly willing to finance at loan-to-value ratios that traditional banks will no longer accept for identical assets. Transactions that would once have been straightforward bank business are increasingly migrating elsewhere.
Outlook for H2 2026
Alexander Lackner, CEO of neworld, said institutional German capital remains largely on the sidelines while funds tied up in legacy positions stay frozen, limiting fresh investment activity even as international capital continues to examine opportunities in Germany.
None of the panellists expect a dramatic change before year-end. Hollstein said the market "won't look fundamentally different" in six months, although sentiment could improve modestly. Hoenen agreed, arguing that pressure inside bank balance sheets continues to build and will eventually force decisions that have so far been postponed. Schindler suggested that progress on geopolitical fronts, whether in Iran, Ukraine or global trade disputes, could improve confidence even without materially changing domestic market fundamentals.
The consensus was that the refinancing wall is not disappearing; it is being pushed forward. Capital remains available for the right assets, but, as panellists broadly agreed, the market has largely adjusted to the new financing environment. The remaining question is how quickly owners, lenders and investors are prepared to recognise that the reset has already happened.