The Real Estate division manages and optimizes Werhahn's commercial property holdings. Its portfolio is weighted heavily toward real estate in good to prime locations in greater Cologne and Duesseldorf, the Rhine-Main region, Berlin and Munich. The Neuss-based division also offers consulting in corporate real estate management (CREM) for all divisions of Wilh. Werhahn KG. CREM identifies mission-critical and non-mission-critical properties and develops or disposes of them according to their strategic importance.

Tenant retention and portfolio optimization guarantee income

The Real Estate division comprises two areas of activity. Its focus is on property management, i.e. the systematic control of its own, commercial portfolio of land and buildings in prime locations. Its second area of activity is Corporate Real Estate Management (CREM). The aim of this service is for the Real Estate division to advise other companies in the Werhahn Group on all property-related matters.

 

In general, the property investment market declined in 2009. The market environment was characterized by the restrictive lending policy of the banks. On the other hand, equity-rich investors often counted on prices falling further and held back from activities. As a rule, real estate providers were therefore unable to achieve their price expectations in the market. Individual transactions took place in the best inner-city locations. Sales activities in less attractive locations were hardly observed.

 

The negative consequences of the economic crisis also had a delayed effect on the rental market. Net sales generated by the leasing of office space fell in the first half of 2009. The retail rental market in prime locations was largely stable, whereas prices fell in secondary prime locations.

 

In the 2009 business year, net sales in the Real estate division were slightly below those for 2008. The reason for this was the fractionally higher vacancy rate. The rent level achieved in primary locations was maintained while secondary prime locations saw a slight fall in rental income in line with the general rental market conditions for new business. Major construction work at the Schlossstraße and Französische Straße properties in Berlin and the Rathausufer property in Düsseldorf led to scheduled increases in costs. However, due to higher lease premiums from tenancies and settlement revenue from a participation, the operating result for the Real Estate division corresponds approximately to that for the previous year.

 

Within the framework of property management, one building in Cologne and one in Berlin underwent core renovation. This work was completed within time and cost budgets in 2009. An undeveloped parcel of land in Neuss was sold as part of the portfolio restructuring.

 

The economic crisis will continue to affect the real estate market in 2010. On the one hand, this will offer opportunities for investments due to falling purchase prices. Yet, at the same time, an increase in the insolvency risk faced by tenants is to be expected. This could mean that in the 2010 business year there will be an increase in the failure rate for rent payments and a decrease in results.

 

In general, it can be assumed that the demand for premises in prime locations will remain constant and the price decline will continue for secondary premium locations.