GERMANY – Aberdeen Asset Management has wound down another of its German open-ended real estate funds (GOEFs), this time the institutional vehicle Degi German Business.
The fund, which will be liquidated by 20 November 2015, is the latest in a series of GOEFs to be terminated in Germany after serious liquidity issues.
The fund, launched in 2006, has a number of institutional investors, including insurance companies, pension funds, trusts, family offices and asset managers. “Liquidation is believed to be the best solution for ensuring equal treatment of all investors,“ Aberdeen stated.
The fund generated an average return of 4.2% since between 2006 and 2010. At the end of October 2012, the fund held 17 properties with a total value of €219m. Its liquidity quota today stands at 8%.
“The values of the properties held by the fund were hit by the crisis and adversely impacted fund performance,“ Aberdeen said.
Redemptions of units in the fund were suspended in November 2010, since which time four assets in Potsdam, Bonn, Mannheim and Stepyer, respectively, have been sold generating proceeds of €55m.
“This cash flow was not, however, sufficient to service the redemption applications,” Aberdeen said.
As part of the winding down process, two payouts are scheduled each year at six-month intervals, starting in April 2013.
Meanwhile, the German federal bank, the Bundesbank, has warned that “price exaggerations are possible” in certain real estate sectors and regions in Germany.
In the most recent financial stability report (Finanzmarktstabilitätsbericht 2012), the federal bank noted that the danger of a bubble in Germany in general “remains low” but that certain segments might be affected.
According to the Bundesbank, the major increase in prices since 2010, which exceeds that of rents in larger cities, can be “seen as an indicator for price exaggerations”.
Another development that worries the bankers is the rise of loans taken up for higher priced properties.