The German real estate market is facing a significant change that will bring challenges for buyers and investors alike. Market dynamics will change significantly in the coming years.
Demand for real estate is currently low due to high inflation and uncertainty surrounding political developments. The decisive turning point has already been reached because the supply of real estate exceeds demand, which will lead to a further fall in real estate prices. This will then offer liquid buyers the opportunity to enter the market in greater numbers due to more competitive prices. It is now important to implement strategies for survival as a mezzanine financier.
In the current phase, mezzanine-financed project companies are increasingly under pressure.
As long as excessive bureaucracy and regulations, legal uncertainties, rising energy costs, shortages of building materials, high prices for materials and tradesmen’s services and rampant uncertainty among typical middle-class buyers persist, there will be numerous insolvencies among real estate companies. The wave of insolvencies is already rolling in. This particularly affects mezzanine financiers who, unlike banks and savings banks, hold subordinated receivables. Here it is important to build up a protective wall in good time. Because if borrowers fall, mezzanine capital providers and crowd investment companies will also find themselves in dangerous waters at some point. The next two years will be decisive in determining who stays and who does not survive.
The efficient and effective solution for mezzanine financiers:
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Contractually stipulate the pledge of rights to shares in the project company
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In the event of delayed or defaulted installment payments, immediately assert the pledge of rights
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Promptly initiate the public auction of the company shares. Especially in the event of impending insolvency.
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In the case of non-performing loan commitments, there are always information deficits and loss of control, sometimes driven by criminal energy. This can be mitigated by the timely, complete takeover of the borrower through a public auction, which the lender is entitled to do in accordance with Section 1239 of the German Civil Code (co-bidding by creditors and owners).
Deutsche Pfandverwertung as a partner for the pledge of shares
It is very important to have a suitable partner on board for the timely and legally compliant auctioning of pledged company shares. The generally publicly appointed, sworn auctioneers of DEUTSCHE PFANDVERWERTUNG are specialized in such realizations. They have been successfully conducting auctions of all kinds of rights such as GmbH shares or other company shares as well as securities and patents for many years. As generally publicly appointed, sworn auctioneers, they are authorized by the German state to carry out this sovereign act as an organ of the administration of justice.
Bailiffs regularly refuse to auction on the grounds of functional incompetence (alternatively pursuant to section 191 no. 1 GVGA), as contractually agreed pledges of rights are based on an agreement under private law. Such a realization by the bailiff is therefore not to be ordered by law in the case of agreements under private law, which only have the permissible dispositive character of § 1277 sentence 1 BGB (see OLG Cologne, decision of 30.12.1999, AZ: 7 VA 2/99). Furthermore, according to § 180 (1), the GVGA of the judicial officers only provides that judicial officers voluntarily auction off items (and conversely no company shares) on behalf of the court.
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