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BF.direkt AG: Lending market for commercial properties under pressure

DGAP-News: BF.direkt AG / Key word(s): Real Estate/Financing
BF.direkt AG: Lending market for commercial properties under pressure

03.08.2015 / 10:19

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Lending market for commercial properties under pressure

- BF.Quartalsbarometer reaches only 1.23 points for Q3 2015 (previous
quarter: 7.07)

- Impact of Greek crisis and higher interest rates

- Competition amongst real estate financers continues to put pressure on
margins

Stuttgart, 3 August 2015. BF.Quartalsbarometer shows unease on lending
market for commercial properties for the 3rd quarter of 2015. The score of
the trend barometer published for the first time by BF.direkt AG, the
independent specialist for strategies relating to the financing practice
for commercial properties declined to 1.23 points, compared with 7.07
points in the previous quarter. Accordingly, the high-flying sentiment
still prevailing in the 2nd quarter of 2015 took a substantial hit.
Assessments by the experts canvassed ranged from an "investment-friendly"
market in the 2nd quarter of 2015 to a "balanced market". "On the other
hand, the survey was held in the hot phase of the negotiations over Greece;
as a result, this temporary snapshot of the prevailing sentiment can soon
reflect a better picture again," explains Francesco Fedele, CEO of
BF.direkt.

The analysis carried out by bulwiengesa AG, an independent firm of analysts
for the real estate sector, responsible for the survey and evaluation of
BF.Quartalsbarometer, shows that in addition to the Greek crisis, the
sudden surge in interest rates early in May shocked all market
participants, with the possibility of a further increase in interest rates
having a negative impact on overall sentiment. While the finance experts
had anticipated higher interest rates in the previous survey taken, they
had only expected these to materialise at a later date.

According to the current BF.Quartalsbarometer, the portfolio finance level
reflects a slight increase for the first time since the 4th quarter of 2014
- if only by 4 basis points. In contrast, the trend of declining project
finance margins in evidence since the 4th quarter of 2014 has continued in
the 3rd quarter of 2015. It fell by a further 12 basis points compared with
the previous quarter, to a current level of 182 basis points.

"We don't expect a sudden turn-around in the development of margins right
now. Competition on the market for property loans will continue to put
pressure on margins for the time being," says Fedele. He said that this