Can corporate supply keep pace with demand?
In Germany, more than anywhere else in Europe, there is no shortage of property sitting on corporates’ books that could be sold or securitized or both.
A report published by Commerzbank in 2005 remains relevant today when it comments: "The real estate assets held by the average German Dax company are more significant than those of its pan-European peers. On average, more than 70% of German companies own their premises." The residential assets that many German companies own dating back to the days when they were built to accommodate an influx of foreign workers "have become a problem," adds the report. That is because they are "non-core assets and they increase capital employed, hence reducing ROCE, but they also offer a possible source of disposals for raiders."
For the time being, however, it is unclear if corporates will rush to use the CMBS market or other mechanisms as a way of unlocking the value in their real estate portfolios.