Sonar Real Estate navigated a year of subdued transaction activity in 2024 by strategically optimizing its managed portfolios, expanding its workforce, and positioning itself as a key player in workout advisory services. Despite a challenging market, the company ended the year with a strong asset base, increasing its assets under management to approximately EUR 3.0 billion. Staffing across its five branches in Germany grew from 51 to 59 employees, reinforcing its operational capabilities.
CEO and Managing Partner, Christoph Wittkop, reflected on the past year, emphasizing the company’s proactive approach in enhancing operational efficiency. “As expected, 2024 saw fewer transactions. Nevertheless, for Sonar, it was a good year, as we benefited from our diversified business areas. More importantly, we utilized this period to optimize the portfolios under our management, which comprise 144 individual properties. Alongside a series of lettings, we implemented ESG initiatives, capital expenditure investments, and refurbishment projects totaling approximately EUR 95 million. The property management team we established in 2023 has proven highly effective, playing an increasingly vital role in our business,” Wittkop stated.
Throughout 2024, Sonar successfully closed three transactions, including two sales and one acquisition, amounting to a total volume of approximately EUR 90 million. The company also secured new asset management mandates as investors shifted their preferences, including the management of a large office property at Berlin’s BER Airport. Sonar anticipates further mandates in 2025 as asset managers realign their strategies.
In leasing activity, Sonar secured agreements for approximately 63,000 square meters of space, with 31,000 square meters of new lettings and 32,000 square meters in lease extensions. A key achievement was the completion of the revitalization of Chausseestrasse 23 in Berlin-Mitte, where the company successfully handed over the fully modernized office building to a new long-term public-sector tenant. The 21,500-square-meter office property had undergone a sustainable value-add transformation following the previous tenant’s departure in 2021.
Sonar Development, the company’s development arm, embarked on a major office-to-residential transformation in 2024. Acting on behalf of an institutional investor, it began repurposing two vacant office buildings at 71–79 and 87 Eschborner Hauptstrasse into approximately 200 modern residential units. This project, designed to address the growing housing demand in the region, integrates sustainable solutions and aims to achieve the KfW-55 energy efficiency standard. A comprehensive feasibility study was conducted in collaboration with planning partners to maximize the use of existing structures while ensuring sustainable redevelopment.
The company also made significant strides in workout advisory services, securing mandates to assist lenders with restructuring and asset management solutions for distressed portfolios. Sonar has already taken on assignments involving senior or partially secured loans, with a total volume in the triple-digit million range. The firm anticipates an increase in workout mandates from banks, pension funds, insurance companies, and insolvency administrators, particularly as lenders tighten their pressure on investors and developers amid looming refinancing challenges in 2025 and 2026.
Looking ahead to 2025, Sonar expects only a gradual recovery in transaction activity. Instead, market trends will continue to be driven by ESG initiatives, refurbishments, and potential changes in property usage. These endeavors require capital investment, which remains difficult due to high interest rates and cautious lending by traditional banks. “However, our experience demonstrates that implementing ESG measures does not necessarily entail high costs. We aim to showcase economically feasible solutions, leveraging the expertise of Sonar Development, which is in demand for both new builds and refurbishments,” said Wittkop.
With banks exercising caution, alternative financing sources such as real estate debt funds are becoming increasingly relevant. However, questions remain about whether the return expectations of these financiers will align with available financing options. While office properties in prime locations are expected to recover as an investment class, residential and logistics assets are likely to remain dominant in 2024. Foreign capital remains abundant, with investors actively seeking value-add opportunities, though transaction volumes have been constrained by significant pricing gaps and a limited number of distressed asset sales.
“Current workout mandates remind me of the final phase of the last crisis. However, rather than individual properties or projects, we are now seeing entire portfolios in distress,” Wittkop noted.
Sonar Real Estate has positioned itself as a strategic partner for investors, offering expertise in capital raising, redevelopment, and asset repositioning. The company’s capabilities extend to the disposal and transformation of underperforming assets, which are attracting growing interest from value-add investors. “With our nationwide presence and in-house capabilities in development and revitalization, we provide real estate investors with sustainable, future-oriented solutions,” Wittkop concluded.
