GERMANY – DB Real Estate, the property fund arm of Deutsche Bank, will sell €1bn worth of real estate holdings from its embattled core German fund to boost the fund’s liquidity, banking sources said.
The sources, who asked not to be identified, said DB Real Estate had hired real estate broker Jones Lang LaSalle as the key advisor on the transaction.
As a result, JLL will both appraise and sell the property in question, most of which is in Germany. The sources added that Deutsche Bank’s investment banking arm in London would assist on the €1bn deal but receive no commission from it.
A spokesman for DB Real Estate declined to comment.
The sale of some of the fund’s property holdings comes almost a month after DB Real Estate took the unprecedented step of closing the fund, known as Grundbesitz-Invest. The move means that the €6.1bn fund is not open to new investment nor can its current investors redeem their shares.
DB Real Estate said the closing of Grundbesitz-Invest was necessary to avert a liquidity crisis. It noted that in the two days prior to the move, the fund suffered €600m in outflows after investors learned of a planned write-down of the fund’s portfolio, which encompasses 130 objects.
The write-down of the portfolio is now scheduled for early February, and analysts believe that as a result, the value of the portfolio could be reduced by between €200 and €600m.
Even so, DB Real Estate’s decision to close the fund has been sharply criticised by its German competitors, analysts and investors.
For example, Alexandra Merz, chief analyst at the fund-rating agency Scope, believes that DB Real Estate deliberately manufactured the crisis at Grundbesitz-Invest to make it easier to sell the fund’s property holdings.
Indeed, the Börsen Zeitung reported that one day after the fund’s closure on December 13, DB Real Estate completed the sale of three Grundbesitz-Invest objects to Rubicon, an Australian investor.