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Dr. Yuval Hen

Real estate in Germany and the acquisition of income-producing properties

Real estate in Germany and the acquisition of income-producing properties

During recent years we have witnessed purchase of rental properties, conducted by Israeli investments companies in Germany, amounting to hundreds of millions of Euros.

It is suffices to review the transactions of public companies, such as Summit Real Estate Holdings Ltd., Ashtrom Properties Ltd., A.LEVI Ltd., Electra Real Estate Ltd., Aspen Holdings Ltd., Delek Real Estate Ltd. " etc., in order to assess the enormous volume of purchases of Israeli companies.

What should one know before buying Real Estate in Germany

The market conditions in Germany are attractive to the brave and insightful Israeli investor.

The impressive gain share of an investor from rental fees minus loan and interest repayments , the governmental stability, the high return on the purchase price and/or on equity, the clear legislation, the German character of timely payment and long-term leases, the strong economy, the potential leverage, the loan terms, which most are non-recourse, Germany's geographic location, the limited scope of the market in Israel, and the like, have all generated huge waves of acquisitions carried out by listed companies and private individuals from Israel in Germany.

The market of real estate transaction initiation in Germany has great loopholes and many of its practitioners are unaware of the great difficulties of the investor. Many investors, small or huge companies, private individuals or public bodies, have invested considerable capital without succeeding to yield a sale agreement or bring about the execution of a sale agreement.

The major cause of that is firstly the realtor's lack of professionalism or lack of familiarity with the German law and the real estate sector in Germany. Without sources of information and in an attempt to gain high, easy and fast reward, real estate agent scan the web, detect transactions and offer them to the investor. A significant part of these transactions are all lost and gone. Some brokers establish connections with local brokers in Germany.

They receive the property's data from other local real estate brokers. In many cases, through this chain of brokers, through one of its links, the property undergoes "improvements", so that the investor in Israel shall receive an offer to purchase a property in Germany, which figures do not reflect the reality. Even if the transaction is actually authentic and the investors signs a memorandum with the seller, very often, the Israeli investors are faced with an experience not typical to Israel: The seller sells the property to another person, despite the memorandum.

You should use a notary and attorney in executing the acquisition

Unlike in Israel, a real estate purchase agreement in Germany, will take effect only if it is made before a notary, and therefore a memorandum which is not notarized, basically does not binds the seller. Since the notary costs in Germany are significant, many investors are satisfied with only a letter of intent on the part of the seller, while willing to risk the legal costs on due diligence, if no deal is made.

In many cases, lawyers have carried out due diligence and then it turned out that the asset data are not as provided by the seller. Even if the investor does succeed to overcome this set of obstacles, he should not be surprised if his agreement with the lending banks at the beginning of the transaction does not go through, because the bank requires additional conditions or decides to change the terms of the financing. It is then no wonder that due to these reasons and others, investors spent hundreds of thousands of Euros in vain to acquire income-producing properties in Germany.

Our office is at your disposal

The operation of Dr. Yuval Hen Law Firm in the field of real estate transactions in Germany divide into 3: The first is due diligence inspections in collaboration with German lawyers.This inspection examines the terms of the transaction, the asset data, its drawings, liens, etc., including a comprehensive report regarding the property.

The second is arranging the financing for the purchase of rental properties in Germany at the amount of minimum 5 million Euro per deal.To achieve that Attorney Dr. Yuval Hen shall locate a German bank or financial institutions in Germany or in other places, conduct negotiations with them regarding the loan and financing terms, and attempt to limit the differences between the Bank's requirements and the aspirations of the borrower.

Another very important activity of the law firm and of notary Dr. Yuval Hen, is initiating real estate transactions, while locating the property, negotiating with the seller, and conducting a preliminary examination of the major property documents, in order to verify that the property data is as described by the seller.

The firm works exclusively for the buyer, and charges only the buyer. So far, the firm has arranged many real estate transactions between sellers in Germany and subsidiaries of public companies in Israel, and private individuals from Israel and the UK and German sellers.