GLOBAL - Deutsche Gesellschaft für Immobilienfonds mbH (DEGI), the German-based property investors, has announced it will end the suspension of redemptions from its DEGI International Fund at the end of this month following new capital inflows into the fund.
The fund has collected €65m in new investor capital since redemptions were suspended on 30 October 2008 which, according to DEGI, shows support from investors and advisers to restart trading.
The fund, which had a volume of €2.6bn at the end of 2008 and returned 4.8% over the year, has also seen an increase in liquid assets available on a daily basis after long-term bond assets were reallocated to cash holdings.
That said, the firm did state it must extend the suspension on withdrawals from the €1.6bn DEGI Europa Fund for another nine months because it has been unable to secure enough liquidity for the daily running of the fund since suspending redemptions last October.
A spokesperson for DEGI said the company plans to raise at least 20% available liquidity by selling bonds, acquiring fresh money from investors and by shifting its long-term liquidity into short-term liquidity.
Approximately 8% of investors investing in both funds are institutional investors, including pension funds, fund-of-fund managers and insurance companies.
DEGI's announcement came at the same time as Norwich Union, the UK life insurance division of Aviva, said it had temporarily stopped withdrawals from its £2.9bn unit-linked property fund (Life and Pensions) as it had concerns about its ability to manage redemptions and the deteriorating commercial property market.
"We recognise that this will be disappointing for some investors who may want immediate access to their capital," said David Barral, marketing director at Norwich Union, said.
"However, this action is in the best interests of investors by protecting the long-term value of their investment and avoiding having to sell properties below their market value," he added.
Longer selling time and the limited number of property buyers in the last year has spurred the insurance company to freeze redemptions for six months, as it fears it would have to sell properties at low prices to raise enough money to pay investors wanting to exit the fund.
NU's fund invests in UK commercial property and currently has around 225,000 investors and £2.9bn (€3.1bn) in assets under management.
Aviva said the deferral period would give the firm more time to sell its property assets at an acceptable price though officials remain optimistic about the future prospects for commercial real estate.
"Despite the current short-term difficulties, we are confident of the long-term prospects for commercial property," said Barral.
Norwich Union's other UK property funds are expected to continue operating as normal.
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