Eugene Owusu, the founder of AMA Capital, a Berlin-based debt advisory firm which was launched this month, sees a growing need for real estate finance brokers in Germany as developers seek capital amid bank retrenchment.
Speaking to Real Estate Capital Europe, Owusu, the former head of portfolio finance at German real estate investment firm BWFD, said developers in Germany had previously relied on traditional lenders to support their projects. However, with the current retrenchment from banks and the higher cost of debt, these sponsors now have to look beyond traditional sources of capital to find financing, he said.
AMA will aim to arrange financing ranging between €5 million and €20 million for mid-sized sponsors, with a focus on residential developers in Germany. Owusu left his role at BWFD earlier this month after three years with the company.
At BWFD, a real estate investment and advisory firm based in Berlin, Owusu’s role included helping sponsors access development financing – mainly for residential developments in Germany – and refinancings.
It is widely recognised that European markets face a refinancing shortfall for loans secured against real estate. This week, manager AEW reported a debt funding gap for six key European markets in the order of €93 billion in the 2023-26 period. In Germany, sources say lower leverage on offer from banks mean developers now need to raise equity or debt capital to support their projects.
“For residential, you used to be able to easily get 80-85 percent loan-to-cost, but right now, even for a typical residential financing, you would be lucky to get 65 or 70 percent LTC. I haven’t seen 70 percent for a while to be really honest,” Owusu said.
“I founded the firm because some of these sponsors don’t have the access to the alternative lenders, so this is the problem we’re facing right now. Some of them have equity, of course, but not to the amount that they can bring their own equity for 30 percent or 40 percent in a deal.”
“So alternatively, they’re looking to joint ventures or other capital providers, or other ways to structure deals, because they are already committed [to their developments],” he said.
Further forward, in addition to providing debt advisory services, Owusu said AMA may aim to provide financing itself, by obtaining institutional mandates or structuring a dedicated real estate debt fund. The proposed idea is to provide mezzanine financing to mid-market sponsors with loan sizes between €1 million and €15 million.