Internos awarded KAG licence to operate German Spezialfonds

Pan-European real estate fund manager Internos has been awarded a KAG licence by Germany's financial supervisory body BaFin to operate German Spezialfonds (special funds) for institutional investors.

Internos, which has EUR 2.1 bn of assets under management, joins a small group of international property fund managers who have KAG units in Germany that can establish the preferred vehicle for German institutional investment in real estate. Other members of the club include Aberdeen Asset Management (through the former Degi fund platform) La Salle, Cordea Savills, Warburg Henderson, Pramerica, Schroders and Morgan Stanley.

Andrew Thornton, CEO of Internos, said: 'This represents a strategic leap for Internos as we now join a small, elite group of major fund management houses that have received BaFin's seal of approval, symbolised in the award of this KAG licence.'

Spezialfonds were established over 30 years ago and have risen in popularity in recent years as they offer investors an established and regulated, tax-exempt vehicle.

By contrast, German open-ended funds (GOEFs), which in principle are open to both private retail and institutional investors, have been tarnished by the redemption crisis and subsequent liquidation of some funds in recent years. The redemption crisis was in part sparked by institutional investors seeking to withdraw their equity from mixed retail-institutional GOEFs after the outbreak of the financial crisis in 2008.

The most robust GOEFs, operated by the likes of Deka Immobilien and Union Investment, serve private clients of the banks that own the fund managers.

Internos has a significant presence in Germany, where it employs 20 people in Frankfurt who manage EUR 1.1 bn of real estate assets. The KAG will be led by Paul Muno, a former managing director of Commerzbank Real Estate who joined Internos in 2011 to lead the effort to secure this licence and strengthen Internos' institutional investor relationships in Germany. The leadership team will include two additional directors, Berthold Becker and Georg-Henrich Prinz zu Stolberg-Wernigerode.