Deutsche Bank AG is looking to divest up to $1 billion in US commercial real estate loans, a move driven by the adverse effects of rising interest rates on its real estate holdings. Sources familiar with the situation, who requested anonymity due to the confidential nature of the information, revealed that the Frankfurt-based bank is actively marketing these loans to alleviate some capital pressures.
As a significant lender in the US commercial real estate sector, particularly in office spaces, Deutsche Bank reported $16 billion in loan exposure to this market by the end of the second quarter. Of this, $7 billion was tied to office properties.
The bank’s credit provisions for this asset class have surged to double their level from a year prior, according to a recent investor presentation, indicating that further measures may be necessary to manage the strain on its portfolio.
In response to inquiries, a bank spokesperson stated via email that the sale of these loans is part of its standard book management strategy and noted that similar transactions have been conducted in previous years.
The commercial real estate market has been significantly impacted by increasing borrowing costs, with US office spaces performing particularly poorly due to rising vacancy rates, exacerbated by the growing trend of remote work.
