Commercial Real Estate

Economic uncertainty and a hesitant market present multiple challenges in the commercial real estate sector. The CapitalSource Commercial Real Estate group specializes in providing financing to owners of commercial properties. We leverage our expertise in this sector, and with a strong balance sheet and in-house servicing, provide capital to our clients—even during the most challenging economic times.

The prospects for commercial real estate financing, the core business at Eurohypo, are positive, however. The loan portfolio will decline through proactive measures to improve portfolio quality and a focus on high-margin roll-overs. The Bank will continue to be very selective in new real estate business. Total new commitments and rollovers are likely to be on a roughly similar scale to last year. With loan loss provisions expected to be down in most markets and administrative costs at a low level, Eurohypo expects to make a pre-tax profit overall in Commercial Real Estate. The precondition is, however, that the debt crisis does not spill over to larger economies in the euro zone and the real estate markets continue to stabilise. Given the charges expected in Public Finance, though, the overall result for 2011 will be a loss.

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