REAL ESTATE – DB Real Estate’s embattled core German fund has been hit with another €1.36bn in investor outflows since it was re-activated on March 3, according to the new statistics from German fund industry association BVI.
The outflows mean that the open-ended fund, known as Grundbesitz-Invest, has around €4bn in assets, against €6.1bn in early December, just before DB Real Estate took the unprecedented step of temporarily freezing the fund. The closing followed outflows totalling around €600m within two days.
But a spokesman for DB Real Estate in Frankfurt stressed that the latest inflows were not a problem for Grundbesitz-Invest as the fund had more than enough liquidity. “The fund can take it. It is open and will now stay open,” he said.
As reported, DB Real Estate is in the midst of selling €1bn of Grundbesitz-Invest’s properties and expects to complete the sale by July. To restructure the fund, DB Real Estate said that by 2008, the fund’s investments will be split 50-50 between Germany and the rest of Europe. Currently, the fund is 60% invested in Germany.
For the open-ended property fund sector as a whole, BVI said investor outflows totalled €7.5bn in the first quarter of 2006 – €2.1bn of which were in March alone. Investor confidence in the asset class has deteriorated considerably due both to the problems at DB Real Estate and before it, DekaBank, as well as poor returns by Germany funds.
However, the BVI statistics reflected that while nearly all major providers continued to see outflows in March, some smaller players like KanAM, SEB Immoinvest and AXA Immoselect had slight inflows.
According to Bärbel Schomberg, chief executive of DEGI, a major open-ended property fund provider, the March data were a sign that investor confidence in the funds is recovering. “I expect that in the next few months, confidence will be restored and investors will once again invest in the funds,” Schomberg told German newspapers.
She added that the current modest recovery in Germany commercial real estate market was the key reason for the trend.
Open-ended property funds from German providers currently have €85.1bn in assets, while closed funds from the providers have €85.8bn.
Property funds targeted at German institutional investors have a further €15.6bn, followed by €15bn in private equity funds and €8bn held by listed real estate vehicles.