Lending Business

Aareal Bank Group’s business strategy focuses on sustainable business success.

As a leading provider of smart financing, software products and digital solutions for the property sector and related industry, we promote economically stable, ecological and social development in a number of ways, for example, by way of:

Aareal Bank Group finances commercial properties – and in particular office buildings, hotels, shopping centres, and logistics and residential properties – rather than industrial plant and projects that are controversial from a sustainability perspective or properties that are contentious for other reasons. We focus on financing existing buildings (investment financing).

Active portfolio management makes it possible for us to optimally allocate equity to the most attractive products and regions from a risk /return perspective, within the scope of our three-continent strategy. By complying with maximum allocations to individual countries and ensuring a variety of property types within our portfolio, we ensure a high level of diversification and avoid concentration risk, something that we achieve not only by managing our new business but also via our active syndication services.

The use of specific quantitative and qualitative criteria ("selected by Aareal Bank") and a high level of risk sensitivity both contribute to the quality of our portfolio. We combine a keen eye for opportunities and risks with local market expertise and in-depth sector knowledge. This enables us to produce end- to-end assessments of properties or loans.


In the area of commercial property financing, our main focus is on investment financing, i.e. on financing completed buildings. The properties are usually secured by senior liens, can serve as cover assets and have moderate loan-to-value ratios. We satisfy ourselves for each and every loan of the enduring quality of the properties that we finance. 

In the lending business, Aareal Bank Group's organisational structure and business processes are consistently geared towards Group-wide effective and professional risk management. This includes comprehensive compliance with supervisory requirements. Our consistently low credit risk indicator is proof of the contribution that Aareal Bank Group makes to the stability of the financial market, especially in the area of commercial property finance.

Financing properties and portfolios entails more than just granting loans. With markets changing more and more rapidly, our clients’ success depends critically on whether they can gain a lead in the markets in which they operate. Our structuring skills – i.e. our ability to implement customer wishes and expectations – in the financing business and our efficient loan approval process aim to ensure our clients have this advantage.


Aareal Bank has a broad, sound base for its refinancing requirements. We have established ourselves as an active issuer of Pfandbriefe, which account for a major share of our long-term funding. Pfandbrief issuance is governed by the German Pfandbrief Act (Pfandbriefgesetz – PfandBG), whose strict provisions are focused in particular on investor protection. This means that Pfandbriefe are a particularly sound investment with a proven market infrastructure – something that remains true even in uncertain times. Their excellent credit ratings are valued by investors in Germany and abroad.

The AAA rating awarded to these Pfandbriefe by Moody's confirms the quality of Aareal Bank's mortgage cover assets pool and our Pfandbriefe and senior unsecured bonds are also recommended as investments by imug/Vigeo Eiris from a sustainability perspective. The diversification strategy used in commercial property financing can be seen among other things from the geographical distribution of the cover assets pool. For example, Aareal Bank’s mortgage Pfandbrief is one of the most highly diversified covered bonds in the world.

Deposits by the housing industry and institutional money market investors are another source of refinancing. These are largely independent of the capital markets and represent an important additional pillar in the Bank’s long-term funding mix.

Since 2012, we have regularly subjected Aareal Bank Group’s securities portfolio to a sustainability analysis, in order to track our progress. Most recently it was conducted in June 2018. The independent rating agency oekom research came to the conclusion that the issuers listed in our securities portfolio achieve best-in-class status on average. Exclusion criteria set by us are also considered in the analysis – including human rights violations, child labour, press freedom and freedom of expression.

Active portfolio management makes it possible for us to optimally allocate equity to the most attractive products and regions from a risk /return perspective, within the scope of our three-continent strategy. Thanks to our active portfolio management regarding countries, products and types of property, we guarantee a high level of diversification while avoiding risk concentration in our portfolio. Material portfolio management instruments are the management of new business and active syndication services.

Sustainability as a criterion for financing

Our fundamental assessment of the business environment in countries in which we are, or aim to be, active includes both economic aspects such as changes in gross domestic product, unemployment rates and interest rate trends or property market developments but also other factors such as legal certainty, market transparency and levels of corruption in the country concerned.  

We take the following sustainability criteria into account during property valuations performed in association with lending decisions:

  • Economic quality, e. g. the property’s location and rental status, the ability to meet tenant requirements and the economic efficiency of the floor plans
  • Technical quality, e. g. issues relating to the building’s construction, the materials used, fire protection, thermal insulation and soundproofing, fittings and fixtures and the quality of the interior spaces (measured in terms of their thermal, acoustic and visual comfort)
  • Functional quality, e. g. the convenience of a property’s location and its transportation links, general accessibility and barrier-free access
  • Life-cycle quality, e. g. as demonstrated by opportunities for flexible use of properties, the ability to relet them, thirdparty usability and appropriate expenditure on value preservation measures
  • Sociocultural quality, e. g. high-quality architecture, the quality of town planning and potential tenants
  • Ecological quality, e. g. as expressed by environmental liability and contamination audits, and energy efficiency

Regular reappraisals of property valuations in the form of valuation reports allow changes in the criteria shown in the graphic to be identified.

Our property financing business is built on direct, longstanding customer relationships, and continuity of advice and support; in some cases, the same customer contact staff have been in place for many years. Another factor contributing to client satisfaction is our local knowledge and the expertise of our sector specialists. This means that we understand our clients and speak their language.

Our "Fixed Income Investors" are taken care of by our Treasury Team, the members of which have long-standing expertise in the capital market and cultivate links to a broad client base and business partners in the capital market, thus ensuring the refinancing of our property portfolio.

In our Green Finance Framework - Lending, we disclose the eligibility criteria for environmentally sustainable properties and define when energy-efficient renovation measures make a significant contribution to the transformation of the existing building stock towards greater energy efficiency, we provide transparency and allow our clients to make informed investment decisions. In addition, this enables us, as a provider of financing solutions in the property sector, to identify and provide green lending and to report it as such.

Green Finance Framework - Lending

Second-Party Opinion - Aareal Bank Green Finance Framework - Lending