The number of German open-ended property funds (GOEFs) that are forced into liquidation is likely to increase in the wake of new financial regulations such as the Alternative Investment Fund Managers Directive (AIFM). Under the regulation, which is due to be implemented in January 2013, funds will be forced to increase liquidity and will also be supervised more strictly.
The number of German open-ended property funds (GOEFs) that are forced into liquidation is likely to increase in the wake of new financial regulations such as the Alternative Investment Fund Managers Directive (AIFM). Under the regulation, which is due to be implemented in January 2013, funds will be forced to increase liquidity and will also be supervised more strictly.
‘Only a few funds will be able to survive in this market, such as large, diversified funds,’ Marcus Lemli, head of leasing and capital markets at Jones Lang LaSalle in Germany, told PropertyEU. ‘As a result, the number of funds will be reduced and we will see more consolidation and liquidation of funds going forward.’
The number of GOEFs has already shrunk from a total of 46 funds before the onset of the financial crisis in 2008 to 38 today. And according to Barbara Knoflach, CEO at SEB Asset Management, that number is likely to shrink yet further: ‘I think we will see further liquidations going forward. The number of funds could drop significantly,’ she said.
Knoflach believes 2012 could be a 'shaky' year, leading up to the introduction of the new regulations. ‘In response to the new regulations, we are likely to see new hybrid funds - representing a cross between open and closed end funds emerge,’ Knoflach said. ‘Such funds might, for example, only offer redemptions once a year and the life cycle of real estate could be around eight years,’ she said. She declined to comment on whether SEB had plans to launch such funds.
