KanAm halts redemptions from 2nd grundinvest fund

KamAm has halted redemptions for three months from its EUR 5 bn KamAm grundinvest fund, a day after locking up its smaller, dollar-denominated US-grundinvest fund for 90 days.

Grundinvest was the first open-ended property fund KanAm established in November 2001. The US fund was established two years later.

The German fund manager on Tuesday said halting redemptions from the larger fund was necessary to 'safeguard the orderly management and continuation of the fund for its participants'.

The global financial market crisis had led to fund participants becoming disconcerted, KanAm said, resulting in withdrawals the extent of which it declined to disclose.

In July of this year, some EUR 500 mln had flowed into the fund in the space of just 10 days. KanAm said the fund's liquidity rate stood at 26.6% on 1 September, or some EUR 1.3 bn. These resources had been intended to cover dividend payments, asset purchases, fund management costs and other regular payments to fund investors. But due to other 'extraordinary payments' necessitated by the credit crisis, management had been forced to 'slam on the brakes,' KanAm said.

On 17 October KanAm pulled out of the acquisition of the OpernTurm trophy office tower development in Frankfurt. The property in Germany's banking and financial centre was intended for the EUR 5 bn KanAm grundinvest fund.

A KanAm spokesperson told PropertyEU that the fund manager had decided not to increase the proportion of financial properties and tenants in the portfolio given the ongoing turmoil in the global banking sector. She noted that OpernTurm is 50% pre-let and the rest would have to be let in the next year. 'Given the current market conditions it was decided to be on the safe side rather than the risky side.'