#EXPOREAL Discounts in GOEF disposals hit 21% in H1- DTZ

German open-ended real estate funds (GOEFs) which are in disposal mode have seen discounts on book values reach a record level of -21% in H1 2014 as the selling process has accelerated, according to DTZ.

On the first day of Expo real, DTZ Research released its fifth biannual report on the liquidation of the German open-ended funds (GOEFs). The analysis shows that discount on book value reached a record level of -21% in H1 2014 as the selling process has accelerated. The liquidating GOEFs are still expected to sell €14 bn of assets over the next three years, which DTZ says, will provide a wide range of attractively priced opportunities in Europe.

Sales accelerated to €2 bn in the first half of 2014, the highest level since 2012. Some €8 bn of European property has already been sold since 2012. Geographical focus has moved away from the three core countries (UK, Germany and France) to the rest of Europe.

This acceleration in sales is counterbalanced by a dramatic decline in pricing. H1 2014 sales achieved a record 21% discount to book value. This is up from 15% on 2013 deals and a premium of 2% recorded for 2012 disposals.

Some €14 bn of assets remain to be liquidated over the next three years. These are mainly located in Germany (33%), France (18%) and Benelux (17%). We expect fewer sales in 2015, than in recent years. But, target sales of EUR11bn for 2016-17 are disproportionally larger in these three areas.

DTZ Research expects discount on book value to range from 0 to 20% for upcoming sales in 2016-17. This will provide attractively priced opportunities for an increasing range of investors targeting to deploy capital in Europe.

German open-ended funds (GOEFs) hold €82 bn of property assets across the globe. Nearly 20% or €16 bn of these are to be sold by 2017. This is linked to 18 different GOEFs entering into their liquidation phase. These will provide the European market alone with €14 bn of assets sales to 2017.

Magali Marton, EMEA head of Research at DTZ: 'The discounts achieved by GOEFs are consistent with recent sales of pan European portfolios, especially in the logistics sector. This is also in line with recent data from our Q2 2014 Transaction-based Price Index, which showed a 3.5% average price decline in Europe, excluding the UK.'