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CS Euroreal Investors Spark Liquidation of $7.6 Billion Fund

CS Euroreal Investors Spark Liquidation of $7.6 Billion Fund
A Credit Suisse AG office in Zurich. Photographer: Gianluca Colla/Bloomberg

Credit Suisse Group AG plans to liquidate its 6 billion-euro ($7.6 billion) German property mutual fund after investors tried to withdraw more money than the fund has available.

CS Euroreal will be wound up within five years, the Zurich-based bank’s German property-management unit said in a statement today. Two weeks ago, SEB Asset Management AG said it will liquidate a real-estate fund of about the same size because it couldn’t meet demand for repayments.

“Redemption requests greatly exceeded the original forecasts,” Karl-Heinz Heuss, head of the Credit Suisse unit, said today in a statement. CS Euroreal had raised 1.6 billion euros in cash to cover repayments, he said.

Since the global recession that ended in 2009, German real-estate open-ended funds have struggled to meet redemption requests, leading seven to be dissolved. Several more, including a fund owned by UBS AG, Switzerland’s biggest bank, face deadlines this year to reopen or liquidate.

CS Euroreal and SEB ImmoInvest are the largest of these funds. The remaining frozen funds hold less than 500 million euros each, mostly invested by institutions, according to Germany’s financial trade group, Bundesverband Investment und Asset Management.

‘Orderly’ Disposals

“Five years should be enough time for the fund to sell its assets in an orderly way,” said Claus Thomas, a regional director at LaSalle Investment Management in Munich. “There’s still lots of demand for those types of assets.”

CS Euroreal owns La Befane shopping center in Rimini, Italy, and the Europa Galerie mall in the German city of Saarbruecken. SEB’s best known assets are the buildings that make up Berlin’s Potsdamer Platz.

Credit Suisse Asset Management opened CS Euroreal for redemptions on May 9 after the fund had been frozen for two years. The company will probably disclose how much money investors wanted to withdraw from the fund tomorrow, according to today’s statement.

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