Hansainvest to liquidate German open-ended fund

Fund manager Hanseatische Investment (Hansainvest) has announced it is liquidating a German open-ended real estate fund (GOEF) by April next year.

Hansaimmobilia was launched in 1988 for both institutional and retail clients. The fund focused on acquiring existing office, retail and logistics assets and projects in Germany and Europe. Rising capital outflows and high vacancy rates have reduced the value of the fund to EUR 268 mln in August this year.

Hansainvest said the uncertain regulatory environment for GOEFS and closure of several other funds had ‘corrupted the image of the asset class’. An orderly liquidation, according to the company, was the best way to protect investors from a ‘foreseeable deterioration in the fund’s performance’.

Hansainvest has formulated an ‘investor-friendly’ way to dissolve the fund. Sales of fund units have been halted and existing investors will have until 2 October to redeem their equity in the normal way. Investors who choose to stay in the fund will receive a pay-out based on valuations at 5 April 2013. Properties not sold by that date will be transferred internally within Hansainvest to avoid the need to sell at a hefty discount. Remaining investors will also receive sales warrants giving them rights to proceeds of future sales in order to compensate them for devaluations.

Hansainvest said it will in future focus on institutional clients.

High outflows of investor equity have led to the temporary closure, followed by the liquidation of several GOEFs, with a total value of EUR 26 bn, in recent years. Last week it was reported the German government proposes to abolish the GOEF structure as part of the implementation of the AIFM Directive into German law. If the proposal passes into law existing funds could continue to operate but no new open-ended funds could be established.