LONDON (Reuters) -Short sellers have raised their bets against Deutsche Pfandbriefbank (PBB’s) to record highs, data from S&P Global Market Intelligence showed on Tuesday, as the German lender grapples with a downturn in commercial property markets.

Holding a short position against a company involves an investor borrowing shares in a company to bet that the share price will fall.

The proportion of PBB stock on loan to shortsellers reached 19% of its market capitalisation on Thursday, the highest since the bank listed in 2015, before receding slightly to 17% on Tuesday, according to S&P Global Market Intelligence.

Short interest totalled less than 8% of PBB’s shares two weeks ago.

PBB declined to comment. The bank this month sought to reassure investors that it has enough funds to cope with a property slump that has cast a shadow over numerous lenders.

PBB’s shares have lost 30% of their value in February and the price of one of its bonds has tumbled to a record low after S&P cut its credit rating last week, citing concerns about the lender’s exposure to commercial real estate.

The lender’s market cap has shrivelled to about 500 million euros but as one of Germany’s largest real estate financiers it is being watched closely, especially as it made a push into U.S. commercial real estate, where concerns about defaults have soared.

Some of the world’s biggest investment managers and hedge funds including the $62.2 billion Millennium Management, $16 billion Qube Research & Technologies, $1.9 billion Kite Lake Capital, the 957 billion pound Wellington Management, Caius Capital and SIH Capital Group had short positions large enough that they needed to be disclosed by the German regulator.

Millennium Management, Kite Lake, Wellington Management and Qube Research & Technologies declined to comment. Caius Capital and SIH Capital Group did not immediately respond to requests for comment.

“Short interest has been growing in Pfanbriefbank since the beginning of 2023 when initial concerns regarding the bank’s exposure to commercial real estate started to emerge,” said Matt Chessum, S&P Global Market Intelligence’s director of securities finance.

Shares out on loan at other European banks average about 0.25%, he said.

Banks in Europe have about 1.4 trillion euros in loans to the commercial property industry, with lenders in Germany, France and the Netherlands the most exposed to the sector.

(Reporting by Nell MackenzieEditing by Tommy Reggiori Wilkes; editing by David Evans)

The headquarters of troubled German property lender Deutsche Pfandbriefbank pbb is pictured as the real estate crisis widens, in Garching near Munich, Germany February 18, 2024. REUTERS/Wolfgang Rattay/File Photo