German corporate property and the conflict between real estate investment and operating resources

A great number of German companies are suffering an acute financial crisis. Financial optimisation of the substantial property holdings owned by German companies offers an opportunity to reduce costs and to free up capital. However, the demands on property for operational purposes create difficulties when optimisation is carried out exclusively for financial objectives. In this paper it will be shown, by means of an empirical investigation of real estate directors and financial managers of the leading German undertakings, that companies are failing to take the decisive step towards optimisation. The reason for this lies in inadequate internal preparations, manifested in the lack of a linkage between real estate strategy and corporate strategy. Property rights‐oriented analyses of real estate assets create new scope to refinance existing holdings, without sacrificing the important requirements of the units occupying them. This paper discusses the essential steps to a solution and explains the potentials that can be enhanced by a structured financial optimisation of property holdings.