German Funds in Liquidation Selling Properties at 20% DiscountDalia Fahmy
German mutual funds in liquidation are taking a hit as they follow government orders to sell properties.
Real estate assets sold last year for 3.3 billion euros ($3.6 billion) were discounted by an average 20 percent, London-based broker DTZ said in a statement on Tuesday. The biggest concessions were made in the Nordic region and central and eastern Europe, DTZ said.
The open-ended funds, managed by companies including Skandinaviska Enskilda Banken AB and Credit Suisse Group AG, have been forced to liquidate after failing to meet redemption requests. The credit crisis exposed a flaw in their operation: while investors can take money out daily, managers hold assets that usually take months to sell.
“The biggest discounts were recorded for the most urgent disposals from funds that were set to be liquidated in 2014,” Magali Marton, head of Europe and Middle East research at DTZ, said in the statement. “We also saw some long-term liquidation in specific countries within southern Europe, central and eastern Europe and Benelux.”
German open-ended funds have 81 billion euros of property assets globally, and almost 13 billion euros must be sold by 2017, DTZ said. Most of the 11.7 billion euros of properties not yet sold are in Germany, Belgium, Netherlands, Luxembourg and France.