Catella moves to stem German redemption crisis

Swedish real estate advisor and fund manager introduces restrictions to prevent a repeat of last October’s run on the German open ended fund sector.

An affiliate of Stockholm based real estate advisor and fund manager Catella Financial Advisory Group, has introduced a ‘staggered capital’ withdrawal system to prevent mass redemptions by investors in its German open-ended funds.

German open-ended funds suffered a massive run last October as retail investors pulled capital out of property vehicles. In all, twelve funds were affected. In January, Catella Real Estate AG Kapitalanlagegesellschaft became the second German open-ended fund manager to lift its ban on redemptions after Degi, part of Aberdeen Property Investors, which permitted withdrawals on one of its funds in January.

To ensure it doesn’t suffer from sudden low liquidity levels again, Catella – which manages approximately €450 million of equity in three German open-ended funds – has initiated a programme whereby investors must stagger their withdrawals.

The firm told PERE that under the new scheme, an investor which signals its intention to withdraw large sums of money may take out up to €100,000 a day but to withdraw more funds, the investor must accept a three month notice period before doing so.

Bernhard Fachtner, Catella Real Estate AG board member, said the measures had been introduced to enable the firm to avoid the problems faced across the industry last October. He said: “This will force investors to consider their withdrawals.”

Catella suffered €30 million in redemptions on its largest open-ended vehicle, the €390 million Focus Nordic Cities fund which targets investment in major cities across the Nordic region. Catella also runs a German residential and a global woodlands fund.

Following the run by investors last October, Reinhard Kutscher, the head of Germany’s largest open-ended fund manager, Union Investments called for restrictions to be imposed to prevent against sudden withdrawals of money from the funds, but no counter measures had been publicised until now.

Although Union itself did not need to close its doors to redemption requests, other big names such as KanAM, UBS, Morgan Stanley and AXA were forced to close vehicles.