finding distressed real estate

CMBS

Hey Earthwalker, hope you're fine.I just saw your post regarding the distressed RE in Germany / UK and thought I chime in (typed some walls of text on the phone and it just broke down twice now before I could press send, so I'll cut it shorter this time).Generally, the German housing market is a bit unique, I'd say, as a lot of people just rent their houses / apartments but not really buying into it, especially given the now rising cost of interest rates and changing environment. If you look to other European countries, you'll see a greater % of home ownership compared to Germany (various reasons for that).  However, the rising interest rates are definitely noticeable and not everyone has signed a 10-year financing before 2022 or has it soon running out and might have the need to refinance it (I know some folks who are struggling with this and thinking of what to do next). There are some key players for this like "LBS" (financing arm of one of the largest German bank groups, Sparkasse), or "Volksbank", another banking group. These could be some address you could talk to. Also hit by the changed financing conditions is a large player player like "Deutsche Wohnen". They're struggling with their debt load and might be forced to sell off some crown jewels. Eventually, one could chime in and buy other pieces at a discount as well.  If you look at Sweden, from my limited understanding, is the messenger for the rest of Europe. In May this year their largest commercial landlord, SBB, just imploded. Should this continue to Germany (and rest of Europe), there shouldn't be a lack of opportunities for it. Auction processes do exist, but they're often locally limited. One can check these announcements online and in special registers. As far as I'm aware, you'd have to rely on boots on the ground to assess or bid for these. Otherwise, there are a large number of small-midsized developers and construction firms, who do local projects. Sometimes solely in one city, sometimes expanding, depending on the price category you're looking at. For example, we have some developers coming to my city from much higher CoL cities. The prices you'd pay in Hamburg, Munich are astronomically high compared to other less "favourable" cities (which still have decent QoL, just not the tip of iceberg), Düsseldorf, Essen, Münster for example. They paid massive prices for properties and now want to construct high end multi family buildings there (usually for sale only from what I can tell in my city, others might be different). The prices are quite ludicrous given the market prices you usually pay. On the hand though, there are some buildings which almost doubled in price despite not having full renting capacity (never seen that before, maybe it's worth the price, I have no idea). You could also try to keep these in mind. If things go south and they're forced to sell at discount, you could chime in (but your hat will most likely be one of many). Lastly, there's something called "Insolvenzverwalter". When a firm declares bankrupcty here, they go to a specialised court, file an application for opening of bankruptcy process. There are three potential reasons for doing so: Insolvency (§ 17 InsO), impending insolvency (§ 18 InsO) and over-indebtedness (§ 19 InsO). So you could target different stages of the bankruptcy stage. Next, they will either continue to operate by themselves and try to keep control as long as possible ("Eigenverwaltung") or a so called "Insolvenzverwalter" is appointed ("Fremdverwaltung"), which will take the reins. These are usually specialised lawyers, can be accountants, tax advisors or experienced business guys in more rare cases too, then take control over the firm. If it's all too late, they'll handle what's left and the related process (a whole other topic). As there are only an estimated 120 of these people for whole Germany and a handful of them handling the big deals, you've a limited number of potential people to talk to. Usually, unless you've some good connections or too much money to throw around, it's not that easy to find actual solid deals, which are not fully beyond trash, but I might be completely wrong on this.Hope this helps you and I can shed some light onto the market.

I have some experience it in from being a lender that is going to foreclosure a building but instead get the Borrower to sell the asset or we will sell the note.

In every case that I have seen / worked on, a brokerage (JLL, CBRE, etc) comes in and markets everything. They send off like 1500 emails, 100 people look at the email, and then there are a few groups who are interested at the end.

The typical purchasers are groups that specialize in the market because some of the deals are quite hairy.

In your case, I think it would be best to contact brokers in markets that are distressed - assuming you have a team that has experience operating these properties.

Distressed note sales with intent to foreclose. Hard to build relationship to be in a buying position as these aren't usually marketed.  Agree that mortgage bankers would be a good inroad. 

Other posters have commented this but relationships are key here. 

Lol imagine finding out the advisor you're paying thousands and thousands of dollars is asking WSO for advice on how to do his job