Investors opt to liquidate SEB’s ImmoInvest fund

SEB Asset Management is to liquidate its EUR 6 bn open-ended fund ImmoInvest by April 2017, the fund manager announced in a statement on Monday, in what may be just the first closure of its kind this month.

SEB said that 'despite all efforts', the liquidity required could not be met without jeopardizing the quality and structure of SEB ImmoInvest's portfolio if the fund were to re-open. 'I deeply regret the result and, in the name of the whole team of SEB Asset Management, I am thankful for all the encouragement, support and commitment we have received,' Barbara Knoflach, CEO of SEB Asset Management, said in a statement.

Now, another open-ended fund likely faces a similar fate, one German-based analyst, who asked not to be identified, told PropertyEU. 'ImmoInvest's closure is a big deal for the market,' he said, almost certainly sounding the death knell for Credit Suisse's CS Euroreal fund.

Credit Suisse has to decide by 18 May whether to re-open the EUR 6.2 bn fund to redemptions or to liquidate it. 'CS Euroreal would probably also wind the fund down over three or four years. The whole sector of open-ended real estate funds will be massively shrunk and only those where the fund manager is held by a commercial bank with good retail distribution have a chance of survival,' the analyst told PropertyEU. Credit Suisse declined to comment.

The year has not got off to a good start for Germany’s open-ended real estate funds: KanAm announced in February that it would liquidate its EUR 6.3 bn grundinvest fund. A spokesman told PropertyEU at the time that EUR 1 bn of assets were already 'under negotiation'. German regulator Bafin has given KanAm until the end of December 2016 to wind down the fund.

Reinhard Kutscher, chairman of the board at Union Investment, which also manages open-ended funds, said that the news signalled that the consolidation phase of the open-ended fund sector was 'nearly complete': 'There is now a real opportunity to re-focus the debate on the positive features of open-ended real estate funds and their advantages over other investment options. Open-ended real estate funds remain the most attractive form of indirect property investment for small investors,' he said in a statement.

SEB Asset Management announced on 26 April that it would re-open its frozen ImmoInvest fund for one trading day on 7 May 'to allow unit holders' to decide about the future of the fund'. SEB Asset Management announced at the time that prior to re-opening the fund for the day, it would reduce the unit value by around 5% 'as a consequence of a real estate value adjustment'.

Since its launch in 1989, ImmoInvest has been one of the best performing German real estate funds with an average annual return of 5.2%. The fund manager also undertook a sizeable disposal program to ramp up liquidity in the fund to more than 30% by 7 May 2012. It has sold more than 17 properties with a combined value of around EUR 1 bn. It is still trying to sell its Potsdamer Platz portfolio in Berlin, which comprises 19 buildings, including offices.