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Deutsche Bank Said to Fold Real Estate Adviser Group

Deutsche Bank Said to Shut Real Estate Adviser Group
Deutsche Bank AG flags fly outside the bank's annual general meeting at the Festhalle in Frankfurt. Photographer: Hannelore Foerster/Bloomberg

Deutsche Bank AG, Germany’s largest lender, is dismantling a group that advises companies on commercial real estate transactions, according to people with knowledge of the matter.

Warren Friend, a managing director who ran the New York- based division, may be leaving the bank, said the people, who declined to be identified because the move hasn’t been announced. The bank is seeking to find positions for affected employees, including Friend, one of the people said.

“Commercial real estate is becoming part of our credit and emerging markets business,” spokesman John Gallagher said in an e-mailed statement. “The group is very much open for business.”

Deutsche Bank is pulling back from advising clients on real estate financing as it grapples with losses on transactions struck before the credit crisis, such as Station Casinos Inc. and Cosmopolitan Resort & Casino, both of Las Vegas. The Frankfurt-based bank said July 27 it took a 124 million euro ($161 million) impairment charge for the quarter on Cosmopolitan.

Friend, who worked at Morgan Stanley prior to joining Deutsche Bank last year, didn’t return phone calls seeking comment.

While closing the division, Deutsche Bank will continue to originate commercial mortgages for sale as Wall Street attempts to revive the $700 billion market, the people said.

Sales of commercial mortgage bonds tumbled 95 percent to $11.2 billion in 2008 from a record $234 billion in 2007, according to data compiled by Bloomberg. Banks arranged $3.4 billion of the securities last year, and about $1.7 billion has been issued in 2010.

Senior real estate bankers who have left Deutsche Bank include former head of commercial real estate Jon Vaccaro, who joined Ranieri Real Estate Partners, and Eric Schwartz, a co-head in the firm’s commercial real estate group, the firm said in a statement on July 12.

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