German lender Aareal hikes provisions in latest sign of property stress (updated)

Aareal Bank AG

29/02/2024 06:14

(Updates with details in paragraphs 3-5)
       FRANKFURT, Feb 29 (Reuters) - Property lender Aareal
earmarked $478 million in provisions for soured loans in 2023,
the most in at least a generation and the latest sign of the
severity of a commercial real-estate slump rattling investors on
both sides of the Atlantic. 
    Aareal, based in Germany but operating globally, on Thursday
reported that its full-year allowance for loan losses grew to 
441 million euros ($477.78 million) from 262 million euros
during the first nine months of 2023 and more than double the
192 million euros in 2022.
    The figure is the highest this century and surpasses a
recent peak of 344 million euros at the height of the pandemic. 
        It comes as prices and demand for commercial real estate
decline sharply in the United States and Germany.
  
        "Aareal Bank expects the environment in the US office
property market to remain challenging in the 2024 financial
year," it said.
  
        Aareal is one of the biggest property lenders in
Germany, Europe's largest economy, and together the nation's
banks are among the continent's heaviest lenders for commercial
property.
  

($1 = 0.9230 euros)

 (Reporting by Tom Sims
Editing by Miranda Murray)
 ((Tom.Sims@thomsonreuters.com; +49 30 220 133 645;))