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Deutsche Bank

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is reorganizing its global commercial real estate operations to focus on distressed investing opportunities in the U.S., U.K. and Hong Kong, according to business head Jon Vaccaro.

During the commercial real estate boom that ended roughly 18 months ago, Deutsche and other large investment banks focused chiefly on originating and distributing securitized loans in these markets, but that business has slowed to a trickle.

By contrast, "there will be numerous distressed investment opportunities," Vaccaro says.

As part of the reorganization, Deutsche has shuffled several senior executives around the globe and eliminated about 15 positions, bringing to about 400 the total number of employees in the commercial real estate unit. That's down from 500 a year ago, Vaccaro says.

Like most other large commercial real estate lenders, Deutsche Bank has had some very public embarrassments. The bank had to foreclose on the $3.5 billion Cosmopolitan Resort & Casino,

Bloomberg News

reported in August. And earlier this year, $7 billion worth of loans the German bank underwrote to finance New York developer Harry Macklowe's purchase of seven office towers defaulted, requiring Deutsche to take back the buildings and sell them.

Deutsche Bank spokesman John Gallagher says the bank has sold five so far. "The three where we had the most exposure got done right away. Putting the Macklowe issues behind us allows the bank to move on to new revenue opportunities," he says. A source close to the bank says there will be no further writedowns related to those properties.

Vaccaro says the current management shuffle is not directly related to these issues, though it clearly represents a response to the distressed commercial real estate market. That means reducing headcount, eliminating layers of management and centralizing decision-making.

"You need to get your most experienced people closer to where the transactions are happening," he says.

Though the credit crisis is chiefly associated with residential real estate, the commercial real estate market has also been a major problem area. It was probably the major reason for the bankruptcy of

Lehman Brothers

, and large leveraged buyout commitments related to commercial real estate have caused problems across the investment banking industry.

Among those most affected were

Morgan Stanley

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, both of which scaled back their operations sharply earlier this year as they parted company with the heads of their commercial real estate divisions.