Aberdeen Asset Management is to liquidate its EUR 1.3 bn Degi Europa fund. The German open-ended real estate fund has been closed to redemptions for two years and was legally required to reopen by end-October or wind up.
Aberdeen Asset Management is to liquidate its EUR 1.3 bn Degi Europa fund. The German open-ended real estate fund has been closed to redemptions for two years and was legally required to reopen by end-October or wind up.
In a statement on Friday, Aberdeen said it would now liquidate the fund and return cash to shareholders. 'After a comprehensive review, it was envisaged that the current liquidity level of 30% may not be sufficient to meet redemption requests,' the fund manager said.
This is the second liquiditation of a German open-ended fund in the past month. In September, German fund manager Kanam announced it is winding up its US-grundinvest fund in response to demands from a majority of unit holders in Germany's only dollar-denominated open-ended fund. Morgan Stanley has also faced difficulties with its German open-ended fund, but said it intends to reopen its P2 Value fund on 1 November.
Explaining the move, Aberdeen said its shares worth around EUR 400 mln have been traded at a significant discount on the stock exchange since the closure of the fund two years ago. As a result, Aberdeen expected these investors would also seek to redeem their shares on the day of the fund's re-opening. The net asset value of the shares of the fund as of 15 October 2010 comes to EUR 1.27 bn.
The redemptions will be in the form of capital payouts. All investors will receive a certain amount of capital payout per unit; simultaneously the price of their investment will decrease proportionally. This method will be repeated bi-annually on the gains on disposals over the duration of the notice
period until end-30 September 2013.
'This guarantees the same price and payments for all investors ensuring the equal treatment of investor groups,' Aberdeen said. As at end-September 2010, the fund had already sold properties worth EUR 423 mln since redemptions with 19 quality properties remaining in the portfolio.
Aberdeen said it was in intensive talks with various investors 'to sell the properties for the best possible prices'.
Hartmut Leser, head of distribution at Aberdeen Asset Management Germany, commented: 'Investor protection is of the highest priority to us. Our latest calculations show that we cannot guarantee that all investors will receive their desired payouts with the current liquidity rate of 30%. Therefore, Aberdeen has decided on the model of capital payouts to ensure the equal treatment of all investor groups.'