The Grundinvest Fund has hired Knight Frank to find a single buyer for its €1.09 billion London portfolio, which comprises the European Bank of Reconstruction & Development’s London headquarters, next to Liverpool Street station, the ThomsonReuters UK HQ in Canary Wharf, the Deutsche Bank UK HQ on London Wall, and 90 High Holborn, a 182,000 sq ft multi-let office building.
This fund is not alone in halting redemptions after being unable to liquidate assets quickly enough to meet investor wthdrawals. Germany has an €85 billion mutual fund industry which is in deep trouble, with 12 of the 44 funds liquidating or suspended. Other Continental funds such as Swiss-based Credit Swisse Euroreal are also in the same situation. As in the 2008 credit crisis, a rush to liquidate cannot be accomodated when open-ended funds hold assets which take months to realise.
Although many funds bought property at sensible prices, those newer funds which bought at the top of the debt-fuelled boom have reported losses and have unsettled the market. As a result properties around the world are being sold.
Credit Suisse, KanAm and SEB are among the funds which have held hundreds of investor meetings across Germany since May to explain new legislation taking effect in 2013 (which will introduce notification periods, caps on withdrawals and staggered repayments) and showcase the performance of their suspended funds and gauge the scale of potential withdrawals. These three large funds have combined holdings of €16.4 billion and must liquidate if they can't raise the cash needed.
“There’s still a crisis in these three funds, and how it pans out will influence the whole industry,” said Oliver Weinrich, head of Drescher & Cie. Immo Consult AG, a property-fund adviser near Bonn. “The key will be what assets they sell and how they keep investor confidence.”