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Lower sales volume and smaller discount for liquidating German open-ended funds

  • €1.7bn of property assets sold by German open-ended funds (GOEFs) in liquidation in H1 2015, following €5.1bn recorded in 2014
  • Discount to book value remains but at a lower level at 4% for sales in 2015 from 13% in 2014
  • €9bn of European assets to be sold until 2017, mainly in Germany, Benelux and France

German open-ended funds (GOEFs) sold €1.7bn of commercial property assets in the first half of 2015 at an average discount of -4% over book value, according to research released today by global property services firm Cushman & Wakefield.

The seventh biannual report on the liquidation of GOEFs shows the selling process continues to provide investment opportunities in a wide range of countries with funds forced to off-load a further €9bn of European assets before 2017.

GOEFs hold €82bn of property assets worldwide – of which less than €10bn (nearly 12%) are to be sold by 2017, as 18 different funds enter in their liquidation phase. European assets will account for the overwhelming majority of disposals with the €9bn of sales mainly concentrated in Germany (31%), the Benelux (26%) and France (18%).

The liquidation of GOEFs has already provided the market with €14bn of sales since 2012. After acceleration in the final two quarters of 2014, sales volume declined to €1.7bn in H1 2015, slightly below the half year volume of €2bn recorded on average since 2012.

The geographic focus of sales has continued to change, reflecting the proactivity of the GOEFs in their selling process management and the capacity to take advantage of current market conditions. As in the second half of 2014, assets traded in H1 this year were concentrated in Germany (€910m) and in the UK (€500m). By contrast, sales activity outside these core markets declined sharply, from €1.9bn recorded each year in 2013 and 2014 to a modest €250m.

While the volume of sales recorded in H1 2015 declined, pricing achieved by the liquidating funds improved significantly compared with the start of this process. A 13% discount on 2014 sales has reduced to a 4% discount for disposals over the last six months.

Magali Marton, Head of EMEA Research at Cushman & Wakefield, said: “German Open-Ended funds have clearly benefitted from the current booming investment market in Europe and therefore have managed more successfully their assets sales in 2015 so far. Depending on the country, the pricing achieved to book value has ranged from a -26% discount in the Benelux to a premium of 47% for assets traded in the UK, with German assets sales reflecting a 6% discount.

“We expect sales to grow in the rest of the year and in 2016 and GOEFs should continue to demonstrate some proactivity in their liquidation process in order to optimize their sales prices strategy. They still hold €9bn of assets across the region with a large part located in Germany, the Benelux and France.”