‘More conservative’ operators are being ‘vindicated’ for their careful approach in the current climate of macroeconomic headwinds and banking stress, according to Henning Koch, CEO of Commerz Real, the real estate arm of German lender Commerzbank.
‘We’re clearly in a very volatile environment which has quite an impact on your strategy,’ Koch told PropertyEU on the first day of Expo Real. ‘Over the past couple of years, critics asked why we weren’t moving further up the risk curve. I think that the current outlook vindicates our approach.’ He added: ‘I also strongly believe Commerzbank is well-positioned and quite conservative.’
Koch was appointed CEO in May 2021 after his predecessor, Gabriele Volz, lasted just three and a half months at the real estate investment house, citing ‘cultural and professional differences’.
Koch has arguably steadied the helm and at almost 18 months into his tenure has a good idea about where the firm is headed. ‘I’m happy about how the last 18 months have gone,’ he said. ‘We are definitely on the right path and going in the right direction. Obviously, the current headwinds will delay everything a bit. You need to accept what you’re dealing with and react accordingly.’
He said: ‘When I took over last May I couldn’t have anticipated rising inflation and interest rates and the war in Ukraine, on top of the pandemic.’ Yet the firm’s focus on ‘sustainable solutions’ place it on the right track, results suggest.
‘We are having a lot of success with KlimaVest, Commerz Real’s first impact fund for private investors,’ he noted. Launched in October 2020, KlimaVest is now likely to exceed the €1 bn fund volume this year, Koch added. ‘I believe that real estate and renewables are moving towards a state of symbiosis.’
The firm’s faith in renewables is so strong that Koch would eventually like to add them to their open-ended real estate funds, although regulations don’t yet allow that. ‘You can obviously put solar panels on a building, but we’d like to hold wind farms and solar parks in those vehicles too at some point,’ he said. ‘We’re fighting for a change in the rules.’
Looking at asset classes, Commerz Real is still focusing on its main strategies of residential and offices, but Koch said that the current climate might pave the way for logistics investment as well. ‘We have been monitoring logistics for some time. Until now, it’s been too expensive,’ he said. ‘We feel that pricing will now come down which could be our chance to get into the sector, which is probably still the most robust asset class out there.’