Aberdeen dissolves €1.3 billion European property fund

Aberdeen Immobilien has announced it will be dissolving the €1.3 billion DEGI Europa fund at the end of October rather than risk reopening it to a frenzy of share redemptions, thus ending months of speculation over the troubled fund’s future.

The German property specialist, formerly known as DEGI, said in a press statement that it chose to dissolve the fund as it ‘could not be guaranteed that the liquidity of over 30% would be sufficient for the ensuring of redemption demands’.

The news comes after rumours surfaced back in April that the group was looking to sell its DEGI Europa and International property funds, which combined have assets amounting to almost €3 billion. Both funds were closed for redemptions in November 2009 but the claims they were for sale were vehemently denied by Aberdeen, which said it was focused on ‘creating additional liquidity’ in order to re-open the funds.

The fate of the DEGI International fund also remains in the balance. The €1.7 billion fund was expected to reopen for redemptions on November 16, however, the firm has indicated there is a possibility its closure could be extended for another year.

The asset manager said it intends to redeem the DEGI Europa investors every half year with a first large payment being made in January 2011. It described this method as ‘the only and fairest way to guarantee professional and private investors redemptions at the same time’. The whole process is expected to be finalised in September 2013.

One of the reasons it put forward to explain this decision was the tense market environment, outlining that in recent weeks two other funds - an open-ended real estate fund and a fund of fund that invests primarily into real estate funds - had temporarily been closed for redemption.

The group said that since the closure of the European fund €400 million of its shares had been traded with above average deductions at the stock exchange and ‘it had to be expected that investors at the stock exchange would demand the redemption of their shares once the fund would have reopened’.

Dr. Hartmut Leser, managing director of Aberdeen Asset Management Deutschland AG commented: ‘Investor protection is for us our highest priority. Due to the latest calculations we can not guarantee that with a liquidity of over 30% can meet the demands of all investors who wish to return their shares.’