As concerns over tariff uncertainties, mounting federal debt and a host of other economic issues ripple through the United States, international investors and lenders are growing increasingly wary. The unease reached a new peak last week when Deutsche Pfandbriefbank, a major German commercial real estate lender, announced its complete withdrawal from the U.S. market to focus exclusively on Europe. According to the bank, it will discontinue all U.S. business and intends to wind down, securitize, or sell its American portfolio—valued at approximately EUR 4.1 billion with an average remaining maturity of 2.5 years—in a manner that preserves value. The bank stated it would redirect resources from the U.S. to “markets and business activities that promise profitable growth in a stable market environment.”
This pointed reference to stability underscored the bank’s discontent with the current state of U.S. real estate. Speaking to journalists on May 14, CEO Kay Wolf did not mince words, according to Reuters. “This volatility is poison for the business activity of long-term property financing, it is poison for investors, it is also poison for banks, and that is why we are looking at these options,” Wolf said, highlighting the dramatic shift in the U.S. operating environment.
Deutsche Pfandbriefbank’s retreat follows a string of setbacks in 2024. The lender faced persistent challenges in the struggling U.S. office market, which ultimately forced it to abandon a planned dividend, Bloomberg reported.
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The turmoil is not isolated to one bank. The commercial real estate lending sector is grappling with a convergence of pressures: high borrowing costs, looming maturity walls and the highest rates of past-due and nonaccrual loans since 2014. Policy uncertainty and market volatility are compounding the anxiety for investors across the board.
Beneath the surface, systemic risks are quietly building. The Financial Stability Board has warned that private funds involved in commercial real estate lending have introduced hidden dangers. Banks remain indirectly exposed to these risks through their lending to nonbank financial intermediaries, such as REITs and property funds.
Adding to the uncertainty is the proposed section 899 “revenge tax,” which could be included in the upcoming budget and tax legislation. This measure targets what the administration sees as unfair foreign taxes, including those outlined in the OECD’s Pillar 2 framework and digital services taxes.
The impact on investor sentiment is clear. According to John Burns Research & Consulting, 71% of commercial real estate investors surveyed in the second quarter of 2025 are holding off on new investments, citing high interest rates and ongoing uncertainty. Foreign investors, in particular, are reducing their exposure to U.S. CRE.
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