REAL ESTATE – DekaBank, a major German provider of open-ended property funds, has sold three commercial properties from its core German fund for €690m as part of an ongoing restructuring of the fund.
DekaBank began the restructuring of the fund last December after it was hit by €2bn in investor outflows in 2004 and 2005. These outflows were caused both by a dismal performance and a property scandal that engulfed the former management of DekaBank’s property fund arm.
In the revamp, DekaBank said the fund had sold two shopping centres in east Germany to PCP Prime Commercial Properties of the UK for €390m. As a result of the sale, the fund’s exposure to retail objects declined to 17.8% from 22.9%, which DekaBank said was within a target it had set for the German fund.
DekaBank also said the fund had sold a shopping centre in Barcelona to Irish real estate firm Quinlan Private for €300m. DekaBank acquired the centre in March 2002 for €242m.
“The current high prices on international real estate, which are largely due to low interest rates, provide us with an excellent opportunity to gradually reduce our exposure to foreign objects and to generate added value for our shareholders,” remarked Reinhardt Gennies, head of DekaBank’s property fund arm.
Following the sale in Barcelona, the fund’s exposure to foreign properties was reduced 13.4% from 18.2%, which DekaBank again said was within its target for the fund.
DekaBank’s revamp of the fund, called Deka-ImmobilienFonds, is to be completed by 2009. Prior to the divestments in east Germany and Spain, the fund had €4.9bn in assets.
In early April, DekaBank said the German fund continued to lose between €2m and €4m in assets per day. Despite this, the firm will guarantee a 2% return for the fund for the third straight year.
Since the beginning of its troubles in 2004, Deka-ImmobilienFonds has cost DekaBank €260m.