Kanam liquidates US-grundinvest fund

German fund manager Kanam said on Thursday it is winding up its US-grundinvest fund in response to demands from a majority of unit holders in Germany's only dollar-denominated open-ended fund. Fund holders will be reimbursed to the tune of $250 mln (EUR 184 mln) before the end of the year after the fund sold 10 of its 17 properties in the space of seven months despite difficult market conditions in the north American market.

A preliminary sales agreement has been signed for one of the remaining assets while the other six are fully occupied properties on long leases and completely free of debt, Kanam said.

Annual returns on US-grundinvest after the sale of the 10 properties on 15 September stood at -9.9% in US dollars or 3.1% in euro terms. This primarily reflects transaction costs, brokers' fees and currency exchange effects.

Kanam said the fund, which was launched in 2003, achieved above-average portfolio growth during its seven-year existence and was a profitable investment with the dollar-euro exchange rate playing a key role in its performance. The value of the underlying property portfolio grew 29.9% over the seven-year period and 12.4% over the past five years, reflecting the impact of the credit crisis.

Kanam spokesman Michael Birnbaum said: 'In February, we asked investors if they wanted to make redemptions - and how much - and they said around $200 mln. When we asked them again earlier this month, they said $300 mln. The US dollar and the euro have been 'dancing' for the past two years and some investors are becoming more conservative and concerned about currency fluctuations. We decided that if investors would like to take their money out of the fund then we would liquidate it. This year, we have sold 10 of the 17 properties in the fund, including the Great Mall of the Bay Area in the San Francisco area. We will use the capital raise to return $250 mln to investors this year, with the aim of returning the rest next year. Today, the fund is worth around $550 mln.'