AXA adds Immosolutions to list of frozen GOEFS

AXA Investment Managers Deutschland has added its EUR 400 mln Immosolutions vehicle to the growing list of German open-ended property funds (GOEFS) that are frozen for redemptions. The three-month suspension of equity withdrawals follows outflows in the wake of the German draft discussion document. The ban will remain in place for three months, AXA said in a statement.

Earlier this month the government published a draft discussion document detailing how to better regulate the funds in response to spells of heavy outflows over the past 18 months. But the initiative backfired as investors took fright that the mooted regulation changes could sink returns and re-define the nature of open-ended funds entirely.

Under the draft discussion document proposals investors should provide two years’ notice before redeeming units. Currently, investors can redeem units at any time - the very definition of an open-ended vehicle.

In addition, the document said that investors should hold units in a fund for at least two years. More controversial is the suggestion that the value of assets within the funds should be written down by 10%, sparking concern from analysts that such a move could wipe out several years of returns.

Property professionals have re-acted with dismay to the latest turmoil. Andreas Quint, CEO of JLL in Germany, told PropertyEU that the writedown proposal is 'ridiculous', adding: 'It's crazy, we expected more from our government. They waited so long to regulate the sector and now they give us this.'

Iryna Pylypchuk, an associate director of EMEA Research and Consulting at CB Richard Ellis in London, agreed: 'Such a discount would be very extreme and should not be implemented,’ she said. ‘Ratings agencies and other experts have already expressed concerns that this could wipe out returns,' she added.

The full article on the GEOF crisis appears in the June edition of PropertyEU Magazine. Click on the link below to subscribe