EwaStudio/Envato
Deutsche Pfandbriefbank (pbb) unveiled its new Strategy 2027 just after Expo REAL, signaling a deliberate shift in how it approaches real estate lending and partnerships. The strategy has ambitious profitability targets, but it also signals a distinct move away from traditional, balance-sheet-heavy lending. Instead, the bank is diversifying into third-party lending, asset management, and strategic collaborations—most notably with U.S.-based Starwood Capital. For many in Germany’s commercial real estate market, the message from pbb is clear: while they aren’t closing the door on financing, they’re opening it more selectively and on new terms.
Central to pbb’s shift is a redefined focus on specific high-growth asset classes. Gone are the days of heavily weighting its portfolio toward office and residential projects. Instead, the bank is homing in on sectors like data centers, serviced living, and senior housing, all areas showing strong demand and relatively high returns. As pbb’s CEO, Kay Wolf, explained, “We have yet to fully tap the potential of our platform. Moving forward, we’ll be concentrating on asset classes that offer sustainable growth and resilience.”
This leaner approach to traditional lending extends to how pbb intends to serve its clients. The bank’s new Real Estate Investment Solutions division aims to build up off-balance-sheet, fee-based services by 2027. This division has two main tracks: pbb Invest, an asset management arm that will focus on real estate debt and equity funds; and Originate & Cooperate, a program designed to tap into institutional CRE investment outside the banking sector. Through partnerships with investors and large funds, pbb will handle sourcing, structuring, and servicing without committing substantial capital to the loans themselves. It’s a shift that marks a growing trend in European CRE financing: banks positioning themselves as service providers rather than traditional lenders.
It’s here that Starwood Capital comes in. The recent partnership announcement between pbb and Starwood, one of the biggest real estate investors globally, underscores pbb’s direction. Through this arrangement, pbb and Starwood plan to originate and arrange loans jointly, giving pbb a powerful ally as it moves toward this capital-light model. “We’re pleased to be expanding our relationship with pbb,” said Starwood’s Co-Head of Europe, Lorcain Egan. “Our partnership reflects a shared vision of expanding in key European markets with a trusted partner.”
For those seeking financing, however, this pivot means more selective options, particularly for traditional project developers. While pbb’s reach in logistics and other high-demand sectors is expanding, standard residential or office projects may find themselves a lower priority. By streamlining its portfolio to reflect changing market demand, pbb hopes to make its operations more resilient against downturns, with the aim of reaching a return on tangible equity (RoTE) of 8% by 2027. But as a lender, pbb may now be more cautious and less flexible than it was a few years ago.
Yet, Strategy 2027 isn’t solely about reducing exposure—it’s about growing revenue streams outside of balance-sheet loans. Pbb’s expansion into fee-based services is expected to make up 10% of total revenue by 2027, creating new avenues for revenue while managing risk. To support these ambitions, the bank is investing heavily in technology and efficiency measures, aiming to lower its cost-income ratio (CIR) below 45%. According to pbb’s CFO Marcus Schulte, the adjustments are designed “to improve the earnings profile and drive value for shareholders,” signaling a focus on profitability and disciplined growth.
In practical terms, the bank’s goals are ambitious: pbb wants to accumulate between €4 billion and €6 billion in assets under management by 2027. To achieve this, it is exploring debt fund structures, potential equity products, and even select acquisitions in asset management. While the U.S. market will remain part of pbb’s portfolio, the bank has suffered recent heavy losses there and is shifting its focus to Continental Europe, where it sees significant growth potential, especially in sectors like data infrastructure, senior housing, and logistics.
So, what does this all mean for Germany’s property developers and investors? For starters, pbb isn’t abandoning traditional CRE lending, but it’s clear that only projects with strategic appeal will find favor. The bank is pivoting towards CRE segments with high growth potential, moving away from standard office and residential development. For developers in these high-demand sectors, pbb’s evolving model may provide new opportunities—especially through its partnerships and broader service offerings.
Ultimately, pbb is aiming to carve out a more profitable, lower-risk position within the CRE finance landscape. Developers should anticipate a more selective lender, one increasingly focused on capital-light, high-yield opportunities. As Wolf put it, “Our expertise in real estate finance can bring new value to institutional clients along the value chain,” making pbb a potentially strong partner—but only for those who align with its strategic vision. For now, traditional developers may need to look elsewhere or adjust their projects to fit within pbb’s evolving framework.
