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Is Germany finally ready to accept CMBS issuance?

Banks have been trying to crack the CMBS market in Germany for years. Their success has been limited by the German banks' willingness to lend on their books and the conservatism of many borrowers. But the economic slowdown has taken its toll on banks, and private-equity houses are increasingly involved in German real estate.

Perhaps more important, until an amendment to the trade tax regulations in August 2003, German CMBS deals required the use of synthetic deals, backed by credit default swaps on loans, rather than loans, according to Jens Rinze, partner at Lovells in Frankfurt.

The amendment clarified the point that non-German SPVs that purchased receivables and had them serviced by the German originators would not be subject to German trade tax. "It is now clear that loan receivables which are sold to an SPV – even if it is German – are not subject to trade tax," says Rinze.

Doug Tiesi, head of real estate and principal finance at ABN Amro in London, says that the move should make deals more attractive to investors because of the increased transparency. Last year there were landmark true sale deals for Marlin, in which the properties occupied by Deutsche Bank were sold to Blackstone and leased back, and Hallam Finance in December, in which Viterra, a subsidiary of utility company E.ON,

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