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Will Deutsche Bank keep investing in trophy properties?

In 2012 German regulators examined allegations that Deutsche Bank had manipulated benchmark interest rates for profit, and a few months ago the bank agreed to pay $2.5 billion in market manipulation penalties to U.S. and U.K. authorities. But the scandal has hardly put the brakes on Deutsche Bank’s lending activity in the NYC commercial real estate scene – for now, at least.

Deutsche Bank (or its subsidiary, German American Capital Corporation) was the originator or lender of four out of the top 10 CRE loans in New York City between June 2014 and June 2015.

The two largest were a $1.13 billion loan for 1095 Avenue of the Americas, a 42-story commercial condo overlooking Bryant Park, and a $1 billion loan for the Crown Building, an office tower at 730 Fifth Avenue. Both loans were issued this year.

In addition, German American originated a $750 million loan for 277 Park Avenuean office tower owned by the Stahl Organization that has tenants including J.P. Morgan and SMBC Capital Markets. Together with Bank of America, German American also refinanced a $675 million loan for 520 Madison Ave., a 43-story office tower that features a segment of the Berlin Wall displayed as a permanent art exhibit. Both transactions took place in July of last year.

But is this pattern of investing in trophy buildings going to continue?

After all, Deutsche Bank is in flux this summer, with new chief executive John Cryan appointed on the heels of a recent BaFin tongue-lashing over the corporate culture it says led to the bank’s market manipulation. Deutsche has also lost Jonathan Pollack, the global head of its commercial real estate group, to Blackstone.

And amid higher litigation expenses (up from 470 million euros to 1.2 billion) and comments from Cryan that Deutsche Bank’s net income in Q2 was “nowhere near good enough” (despite more than tripling, to 818 million euros), Germany’s largest lender is freezing 2015 cash bonuses for management board members and cutting back on overseas activities. It is reportedly pulling out of countries such as Finland, Malta, New Zealand and Peru, where it has a small presence.

It’s hard to say just yet whether or not Deutsche will keep adding high-profile buildings to its roster, but we may not have long to wait: The bank has said it will publicize details about its new strategy at the end of October.

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Alex Veksler

Head of Content

Alex Veksler has 16 years of finance, data analysis and project management experience. He is a former vice president at Morgan Stanley, where he worked on product control of equity and fixed-income derivatives products as well as various projects involving finance and technology, such as revamping risk attribution and balance-sheet systems for profits and losses. Alex has previously worked at hedge funds, most recently as a director at Exigent Capital. He has a bachelor’s in computer science from Yeshiva University and an MBA from New York University.

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Ely Razin founded CrediFi in 2014 with Battery Ventures. A rare combination of seasoned corporate executive and technology entrepreneur, Ely previously served as global head of board governance for Thomson Reuters Accelus and head of business law for Thomson Reuters, after the software company he founded was acquired in 2004. The company, Expert Ease Software, developed AI-based software that automatically summarizes key deal terms for transactions in fields including capital markets, M&A and real estate. Ely began his career as a corporate and securities lawyer, and holds an LLB and MBA from York University.

Frank Muhlon

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Frank Muhlon oversees CredifX, the commercial real estate financing marketplace that mines the CrediFi database at its core. Prior to joining CrediFi, Frank served as vice president of Northeast region business operations for online CRE property trading platform Ten-X, which has closed over $40 billion in transactions since its inception. He has also held key positions at Orix USA/Houlihan Lokey, Silverstein Properties and Trammell Crow Company. Frank received his master’s degree in real estate finance from New York University and his bachelor’s in finance from Rutgers University.

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