U.S. commercial property turmoil weighs on German banks

By Tom Sims

FRANKFURT, March 5 (Reuters) - Two of Germany's top property banks reported weaker financial results for 2025, citing troubles in the United States' commercial property market as they focus more on Europe.

The German property financing lender Deutsche Pfandbriefbank PBBG.DE on Thursday posted a net loss for 2025 as it withdraws from the U.S. market.

At the same time, the lender Aareal Bank reported a 23% decline in profit and said it wants to reduce business in the United States.

The U.S. has been suffering from high office vacancies and falling property prices.

"We will remain active there but want to reduce U.S. office property loans faster than originally planned," said Aareal CEO Christian Ricken.

PBB posted a net loss of 284 million euros ($329.33 million) for the year, compared with a profit of 90 million euros in 2024.

It had warned last month that it was unlikely to meet its key financial targets for 2027, citing the drag on momentum from a subdued commercial property market this year.

Aareal Bank's net profit dropped to 137 million euros in 2025 from 179 million euros in 2024.

Privately owned Aareal said that its non-performing loans of $1.1 billion were mainly for U.S. offices.

It said that it took additional charges of 55 million euros.

"In the face of heightened geopolitical and macroeconomic uncertainty, Aareal Bank will continue to pursue a cautious and prudent risk policy," Aareal said.

($1 = 0.8624 euros)