RCA in the commercial property press:

Deutsche Bank CEO Ackermann Endures Scandal

Bloomberg reports: Deutsche Bank: Ackermann Endures Scandal

Josef Ackermann, who has run Deutsche Bank since 2002, was recently reappointed as CEO, extending his contract by three years. A native of Switzerland, Ackermann is the first non-German to hold the position in the bank’s 139-year history. Some have called the banker’s pledge to stick to his 25 percent pre-tax return-on-equity target "a scandal" because it encouraged the industry’s penchant for risk taking.

The bank climbed to No. 3 among arrangers of leveraged loans in Europe, the Middle East and Africa in 2007 and No. 7 in the U.S., according to Bloomberg data, as it chased fees from private ­equity firms in a record year for takeovers. After credit markets froze in the summer of 2007, Deutsche Bank was saddled with 44 billion euros of the loans, including the 1.67 billion pounds ($2.56 billion) it put up as part of a 9 billion-pound syndicate to finance KKR & Co.’s takeover of U.K. drugstore chain Alliance Boots Ltd.

Another distress zone is commercial real estate. In the past two years, Deutsche Bank booked 1.34 billion euros of writedowns on 16 billion euros of commercial real estate loans, the largest share of which were in North America, according to its 2008 annual report. It cut its property investments to 3.2 billion euros by the end of last year.

Deutsche Bank took control of seven New York office towers in 2008 after developer Harry Macklowe defaulted on about $7 billion in loans the bank helped arrange to enable him to buy the buildings from New York-based LBO firm Blackstone Group LP in 2007. It has since sold all but one of the properties and would lose as much as $600 million in all if the remaining property, Worldwide Plaza, were sold today, according to estimates by Dan Fasulo, managing director at real estate research firm Real Capital Analytics.

Deutsche Bank also foreclosed on a Las Vegas property, the $3.5 billion Cosmopolitan Resort & Casino, after developer Ian Bruce Eichner defaulted on a $760 million loan. The bank is moving forward to complete the project and is in talks to hire a company to manage the complex, whose two glass towers house 3,000 condos and hotel rooms. With the Las Vegas Strip experiencing its worst annual decline on record, Deutsche Bank booked a 500 million-euro impairment charge on the Cosmopolitan in the first quarter.