Roger Orf, managing director and head of Europe at Apollo Global Real Estate, told delegates at this year’s PERE Forum: Germany 2011 that Germany is the top European pick in terms of countries to invest in amid the current sovereign debt crisis.
In a wide-ranging historical and present-day analysis of Europe and its economic challenges and prospects, he told delegates at the Villa Kennedy Hotel in Frankfurt this morning:“Europe’s periphery countries are dangerous, but Germany is safer. Provided the Euro holds together it is a good bet as the strongest economy. Even if the Euro doesn’t hold together – and as you can tell from my address I don’t think it will collapse – a ‘neue deutschmark’ would appreciate, so it is a two-way bet,” he said.
He highlighted German residential and retail property as being of particular interest.
Speaking generally on real estate investing in the country, he added: “Where do I think there is growth? In any place that participates in globalisation, I think there is growth, and Frankfurt for example is an important financial capital.”
Playing down hopes of a huge distressed or ‘opportunistic opportunity’, Orf said banks were mainly holding onto their real estate, and when asked what the Europe economic crisis meant to commercial real estate lending of the inter-European banking community, he said the picture was “grim”. “Germany’s banks used to be much more aggressive lending across the continent, and while they still do, that is the exception not the rule, and some banks are out of business,” he said.
The former Citi Property Investors, Lone Star and Goldman Sachs veteran, also reflected upon newspaper reports that Apollo Global Management was buying WestImmo, the real estate lending part of West LB bank.
“I think it is a great time to get into the banking business. Why? Because others are getting out of it. You are getting margins of 250 over, and leverage yourself ten to one. It is a phenomenal business. But I think that regulators are pushing the model of the traditional banks. Basel III is a nightmare for traditional lenders. What will happen? I think you will find groups like ourselves buying banks and hedge funds will start lending.”
PERE Forum: Germany is taking place against continued turmoil in Europe’s financial market due to sovereign debt crises most recently involving Italy.
In Berlin this morning, German Chancellor Angela Merkel reiterated her opposition to a greater role for the European Central Bank in helping to solve the euro zone debt crisis, saying political action was required.
Reuters quoted Merkel saying: “I am convinced that only political solutions can resolve the situation. If politicians think the ECB can solve the euro crisis, then they are mistaken,” she said, adding that even if the ECB assumed a role as a lender of last resort, it would not solve the crisis.
Merkel also said it required a big dose of political sensitivity to ease tensions between euro zone members and states who are part of the EU but are not part of the currency union.