BERLIN-Deutsche Bank has frozen one of its major property funds until a revaluation has been completed. The fund, Grundbesitz-invest, is managed by DB Real Estate and has assets of about euro 6 billion ($7.2 billion). The bank expects the revaluation to be completed by the beginning of February.
The decision to revalue follows increased disinvestment by investors prompted by a slow real estate market. Since October 2004 investors have withdrawn about euro 1.4 billion ($1.86 billion). "This is the result of the property crisis in Germany," says one analyst. "But it is likely to be a temporary blip as more money flows into the German property market, creating a self-fulfilling prophecy that the market is recovering. A turnaround, though, is likely to take time."
German media reports say Deutsche Bank could be facing writedowns of up to euro 600 million ($720 million).
This is unlikely to significantly affect Deutsche, says a London-based fund manager. "The bank is cash rich at the moment because of the sale of its stake in DaimlerChrysler and because of the sale of its stake in Eurohypo AG to Commerzbank AG."
A statement by Deutsche Bank says that the decision to freeze the fund was taken in the interests of investors, and that BaFin, Germany's financial watchdog, had been informed. The freezing should not hurt the assets of the fund, the bank adds. It went on to say that on Jan. 11 the fund will still have its planned pay out of euro 1.35 per share.
The Grundbesitz-invest fund was launched in 1970 and not so long ago had fund assets of around euro 8 billion ($9.6 million), making it one of the largest open-ended real estate funds offered on the German market.
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