Spanish bank Santander said on Monday it is has requested a freeze on payouts from Spain's largest real estate fund, Banif, after investors sought to withdraw 80% of the vehicle's capital. In a regulatory statement to Spanish stock market regulator CNMV, the bank said its Banif Inmobiliario investment fund is unable to meet redemption demands which account for EUR 2.62 bn.
Spanish bank Santander said on Monday it is has requested a freeze on payouts from Spain's largest real estate fund, Banif, after investors sought to withdraw 80% of the vehicle's capital. In a regulatory statement to Spanish stock market regulator CNMV, the bank said its Banif Inmobiliario investment fund is unable to meet redemption demands which account for EUR 2.62 bn.
'The fund currently lacks the necessary liquidity to meet the redemption demands,' Santander said.
Santander has asked the Spanish stock market regulator to allow it to suspend full reimbursements from the fund for a period of two years. During this time, the fund will ' start an orderly programme of disposals', the bank added.
The fund, which was 62%-invested in residential properties, has lost about 15% of its value in the fourth quarter of last year as a result of falling property values. It currently owns 7,195 apartments, 25 office buildings and five shopping centres and other commercial assets.
In November, another major Spanish bank BBVA ran into similar problems with its real estate fund. The bank offered investors the possibility to stay in the fund for two years or sell the stake to the bank at current values. With the majority of investors deciding to sell, the lender ended up with 95% of the fund for a total investment of EUR 1.6 bn.
The Spanish funds are the latest in a series of European vehicles which have been frozen over the past months to prevent a run by investors. In the UK, Standard Life Investments, New Star and Aviva have frozen some of their funds over the past weeks, in the wake of fund managers M&G, Scottish Widows and Scottish Equitable. Germany's open-ended property fund industry has also experienced a wave of redemption restrictions. Twelve major funds, with a total of EUR 32 bn in assets under management, froze redemptions in October 2008. Several of their funds announced an extension on the initial 90-day freeze at end January. Degi bucked the trend by lifting the suspension on its Degi International fund from the end of January.
