SEB Asset Management AG will liquidate its 6 billion-euro ($7.8 billion) ImmoInvest portfolio, the largest German property mutual fund to be dissolved after failing to meet investor withdrawals.
SEB ImmoInvest will be wound up within five years after investors asked for redemptions that exceeded its liquidity “considerably,” according to a statement today. The fund increased the cash portion of its assets to more than 30 percent by selling real estate.
“Despite all efforts, the liquidity required could not be met without jeopardizing the quality and structure of the SEB ImmoInvest portfolio,” Frankfurt-based SEB Asset Management said. The company owns 132 properties including Berlin’s Potsdamer Platz.
Since the global recession that ended in 2009, German real-estate mutual funds have struggled to meet redemption requests, causing six funds to be dissolved. Several more, including funds owned by Credit Suisse Group AG and UBS AG, face deadlines this year to reopen or liquidate, according to Germany’s financial trade group, Bundesverband Investment und Asset Management.
“Today was not about real estate itself, but about the packaging,” SEB Asset Management Chief Executive Officer Barbara Knoflach said by telephone today. “The packaging took a hit due to fear and uncertainty from investors.”
When the credit crisis started to escalate in 2008, a scramble to withdraw money exposed a flaw in real estate mutual funds that own properties directly. While investors are allowed to withdraw money daily, the funds hold assets that usually take months to sell.
SEB ImmoInvest has been closed for almost two years. The fund, a unit of Skandinaviska Enskilda Banken AB, owns properties in Paris, Singapore and Rome as well as 19 buildings in Berlin’s Potsdamer Platz complex.
The fund will distribute money to investors in semiannual payments starting in June. SEB ImmoInvest will be dissolved by April 30, 2017.
Credit Suisse’s CS Euroreal fund must tell investors this month whether it plans to re-open, according to a regulatory deadline. CS Euroreal owns La Befane shopping center in Rimini, Italy, and the Europa Galerie mall in Saarbruecken, Germany. Bjoern Korschinowski, a spokesman for CS Euroreal, declined to comment.
“It’s a crisis of confidence in the product,” Oliver Weinrich, head of Drescher & Cie. Immo Consult AG, a property-fund adviser near Bonn. “This doesn’t make the situation any better for CS Euroreal.”
KanAm Grund KAG, another Frankfurt-based asset manager, in February announced a plan to liquidate its 3.9 billion-euro Grundinvest mutual property fund.