Basel II and the German credit crunch?

(Abstract) In the market for German real estate finance at the end of 2001 a phenomenon could be identified that shows significant parallels to the shortening of credit supply in the US market in the early nineties, called the credit crunch. There are two basic reasons that explain the withdrawal of mortgage banks from the current events in real estate debt finance. Both are linked to a lack of risk identification in real estate investment. First, mortgage banks are engaged in a portfolio of bad real estate credits. In the past and today, banks do not receive information to price the true property risks. Especially from their money transfer to eastern Germany they still suffer of high deprecations in these engagements. The high impact of single properties can not be diversified. This is why banks were exposed to higher risks than they calculated in their market risk exposure. On the other hand, the preparation for Basel II indicates how sensitive risk have to be treated according to the new regulatory environment. This causes a split of relationship ties where real estate risks were not priced for decades. The result is a failure of all sorts of real estate finance in Germany. From the survey on institutional real estate investment behavior, it becomes evident that market participants ignore property risks and they do not have the instruments available to price these risks. This is why banks act so cautious in preparation for Basel II. Banks will have to find the instruments to either price these property risks or have intermediaries price them and include diversified securities into their holdings. True intermediaries are not present in German real estate finance. Banks failed in their function to price risk and monitor the quality of investors in debt finance. In addition, a lot of direct finance from households to real estate investors as open-ended or closedended funds takes place. We suggest the introduction of a real estate investment banking function that offers true intermediation services. It monitors the risk pricing of real estate investors and places the securitized and rated risk exposure at banks or in the capital market to provide finance to capital seekers. Future real estate investment would be financed risk-adjusted and financing volumes could increase again.

Asset allocation versus entrepreneurial decisions in real estate investment

(Abstract) Although the application of capital market theory is questionable in real estate investment, many institutional investors still perform asset allocation with historic real estate data. Entrepreneurial investment analysis relies on a different information setting. To date it is unclear which approach, or what data set, offers the most efficient solutions for the use of capital. In order to evaluate policy recommendations for decision making in pension fund real estate investment, we describe an empirical investigation of the investment environment in Germany. We find that current market information restricts the application of capital market models. While the use of investment models and capital market models has been strictly separated, there is no theoretically justified reason for this. Investors have to be aware that they can determine performance parameters for real estate only as approximations. Therefore, it may be fruitful to consider and compare alternative parameter estimates for determining optimal real estate allocations in pension fund investment.

Reliability of Public Private Partnership Projects under Assumptions of Cash Flow Volatility

This paper focuses on dynamic financial modelling of recurring cash flow items in PPP projects in operating stage and on risks associated with the volatility of these cash flows. As we concentrate on so-called government-pays schemes, only cash-outflows are considered, such as operating costs, repairs and maintenance expenses, and administration costs, whereas the revenue side is considered to be not at risk. We show different approaches to modelling the uncertainty of recurring operating expenses and explain how to interpret the results. Our analysis is based on the mathematical framework of stochastic processes, which, in finance, are particularly used to describe price series evolutions in capital markets. We apply them to generate variable trajectories of operating costs and integrate them into a stochastic simulation of the financial model.

A LEED determination of the structures of Ru(001) and of CO/Ru(001)−(√3 × √3)R30°

The structures of Ru(001) and of the √3 × √3 R30° overlayer of CO on Ru(001) have been determined by LEED I–V measurements and comparison to calculations. Special attention was paid to accurate angular alignment, selection of a well-ordered portion of the surface, and avoidance of beam-induced changes of the CO layer. Five orders of reflexes over a range of 300 eV each were used for the clean surface and 7 orders over 200 eV each for the CO superstructure. For the clean surface, a slight contraction of the first layer spacing (by 2%) was found which gave r-factors of 0.04 (Zanazzi-Jona) and 0.16 (Pendry) for 5 non-degenerate beams. For the CO structure the most probable geometry is the on-top site with spacings d(Ru---C) = 2.0 ± 0.1 Åandd(C---O) = 1.10 ± 0.1 Å (rZJ = 0.21; rP = 0.51). The two threefold hollow and the bridge sites can be clearly excluded

Anomalous molecular orbital variation upon adsorption on wide band gap insulator

It is commonly believed that organic molecules are physisorbed on the ideal non-polar surfaces of wide band gap insulators with limited variation of the electronic properties of the adsorbate molecule. On the basis of first principles calculations within density functional theory (DFT) and $GW$ approximation, we show that this is not generally true. We find that the molecular frontier orbitals undergo significant changes when a hydroxy acid (here we chose gluconic acid) is adsorbed on MgSO$_4$$\cdot$H$_2$O(100) surface due to the complex interaction between the molecule and the insulating surface. The predicted trend of the adsorption effect on the energy gap obtained by DFT is reversed when the surface polarization effect is taken into account via the many-body corrections.Comment: 5 pages, 3 figure

Kosten und Leistungswirkungen betrieblich genutzter Immobilien – Ergebnisse einer schriftlichen Befragung bei Großunternehmen in der BRD

(Ziele der Untersuchung) Sowohl über die Kosten- und Leistungswirkungen als auch über die Risikowirkungen von Immobilien liegen derzeit nur wenig gesicherte Erkenntnisse vor. Eine Dokumentenanalyse schließt sich aufgrund dieses geringen Vorinformationsniveaus weitgehend aus. Die vorliegende Studie ist deshalb sehr explorativ und deskriptiv angelegt. Das Ziel der empirischen Erhebung ist die Beschreibung der Kostenwirkungen von Gewerbeimmobilien im Leistungserstellungsprozeß von Großunternehmen. Sie ist Teil einer umfassenderen Forschungskonzeption, die Einblicke in die Erfolgswirkungen der betrieblichen Immobilienwirtschaft verschaffen soll.

Risiken immobilienwirtschaftlicher PPPs aus Sicht der beteiligten Akteure. Ein Beitrag des Arbeitskreises PPP im Management öffentlicher Immobilien im Bundesverband Public Private Partnership e.V. (BPPP)

(Problemstellung) Die Entscheidungsrelevanz von Risiken bei immobilienwirtschaftlichen PPPs wird derzeit recht kontrovers diskutiert. Es besteht Konsens, dass immobilienwirtschaftliche PPPs immer auch die Risikoposition der öffentlichen Hand wesentlich beeinflussen. Daher liegt auf der Hand, dass in einer realistischen Bewertung der Wirtschaftlichkeit von immobilienwirtschaftlichen PPPs dieser Risikotransfer Berücksichtigung finden muss. Unklar ist hingegen, welche Risiken in einem Wirtschaftlichkeitsvergleich zu berücksichtigen sind und vor allem, in welcher Höhe die Risiken monetär zu bewerten sind. In der Konsequenz ist zu befürchten, dass die allgemeine Unsicherheit in der Bewertung der Risiken dazu führt, dass diese im Entscheidungsprozess über alternative Beschaffungsvarianten nicht adäquat berücksichtigt oder ganz vernachlässigt werden. Immobilienwirtschaftliche PPPs drohen damit im Wirtschaftlichkeitsvergleich systematisch falsch, tendenziell zu schlecht, bewertet zu werden. Unstrittig bestehende Potenziale dieser innovativen immobilienwirtschaftlichen Konzepte bleiben somit ungenutzt. Darüber hinaus ist der aktuelle Wissensstand zu PPPs noch weit davon entfernt, im Zusammenhang mit unterschiedlichen Finanzierungsformen klare Aussagen darüber zu treffen, welcher Partner welche Risiken idealerweise übernehmen sollte. In diesem Zusammenhang ist bis dato ebenfalls kein Konzept vorhanden, wie sicherzustellen ist, dass diese Risiken tatsächlich auch von ihm getragen werden und im Schadensfall nicht, quasi durch die Hintertür, der Gemeinschaft angelastet werden. Der vorliegende Beitrag soll aus den unterschiedlichen Sichtweisen der an PPPs typischerweise beteiligten Gruppen zeigen, welche Schlüsselrisiken bei der Bereitstellung von Immobilien zu beachten sind. Darüber hinaus werden aus den verschiedenen Perspektiven Hinweise auf eine effiziente Risikoallokation gegeben, aus der ersichtlich wird, welche Risiken die einzelnen Parteien übernehmen sollten. Ziel des Beitrags ist es schließlich, den Entscheidungsträgern auf Seiten der öffentlichen Hand die Entscheidungsrelevanz von Risiken bei der Konstruktion und Vergabe von immobilienwirtschaftlichen PPPs zu verdeutlichen.

Conductance through single biphenyl molecules: symmetric and asymmetric coupling to electrodes

The contacts and the chemical bonds formed between metallic electrodes and molecules determine to a large extent the conductive properties of single molecular junctions, which represent the smallest possible active elements in an electronic circuit. We therefore investigated in a comparative study, using the break junction technique (MCBJ), the conductive properties of [1,1'-biphenyl]-4,4'-dithiol (M1) and of 4'-mercapto-[1,1'-biphenyl]-4-carbonitrile (M2) between gold electrodes. As a function of electrode separation, characterized by the conductance close to 0 V, we found several plateaus of relative stability, with those close to 0.01G(0) being the most pronounced. The overall conductance of symmetric and asymmetric molecules were surprisingly similar, only the range of stability was smaller for M2. While M1 yielded symmetric I-V-curves, only small asymmetries were detected for M2. These are also reflected in the comparable values for coupling parameters using the single level resonance model. The high conductance for the asymmetric molecule is interpreted as a result of coherent coupling of electronic states through the whole molecule, so that the outcome cannot be predicted just by adding conductive properties of individual molecular groups

Two-dimensional crossover and strong coupling of plasmon excitations in arrays of one-dimensional atomic wires

The collective electronic excitations of arrays of Au chains on regularly stepped Si(553) and Si(775) surfaces were studied using electron loss spectroscopy with simultaneous high energy and momentum resolution (ELS-LEED) in combination with low energy electron diffraction (SPA-LEED) and tunneling microscopy. Both surfaces contain a double chain of gold atoms per terrace. Although one-dimensional metallicity and plasmon dispersion is observed only along the wires, two-dimensional effects are important, since plasmon dispersion explicitly depends both on the structural motif of the wires and the terrace width. The electron density on each terrace turns out to be modulated, as seen by tunneling spectroscopy (STS). The effective wire width of 7.5\,\AA\ for Si(553)-Au -- 10.2\,\AA\ for Si(775)-Au -- , determined from plasmon dispersion is in good agreement with STS data. Clear evidence for coupling between wires is seen beyond nearest neighbor coupling.Comment: 5 pages, 4 figure