SEB to dissolve German real estate fund

Due to an inability to secure liquidity in the current market, SEB ImmoInvest will be dissolved. The properties acquired on behalf of the €6 billion fund will be sold over the next five years.

Due in part to an inability to secure liquidity and the impact of the current European economic crisis, SEB Asset Management has decided to close its open-ended German real estate fund, SEB ImmoInvest.  “In order to safeguard the interest and equal treatment of all the fund-holders in SEB ImmoInvest, it has been decided that SEB ImmoInvest will be dissolved at the latest as of 30 April 2017,” the firm said in a statement. 

SEB ImmoInvest, a German real estate fund comprised of 132 property investments, is managed by SEB’s Germany-based asset management firm, SEB Investment. Launched in 1989, SEB ImmoInvest has a net asset value of €6 billion. The fund, which targets all real estate asset classes with a focus on commercial office properties, has had an average annual return of 5.2 percent. 

An attempt to re-open the fund was made on 26 April. In order to secure the continuation of the fund and safeguard the investors, an amendment of the fund's terms and conditions was made, offering the investors a limited redemption of their holdings as of 7 May 2012. The offering was conditional upon the liquidity of the fund being secured. However, this did not materialise and thus the fund will be dissolved. 

“Following the dislocations in the markets during the financial crisis in 2008 and 2009, the liquidity in the fund was hampered,” the firm explained. “Thus, in order to safeguard the equal treatment of all fund holders, SEB ImmoInvest was closed for redemptions in May 2010, just like many other German real estate funds.” A spokeswoman for SEB told PERE that a number of banks with German real estate funds, such as Deutsche Bank and UBS, also recently closed commingled vehicles targeting the region. 

Investors in SEB ImmoInvest will receive a first pay-out of approximately 20 percent of the assets in June 2012. This will be followed by semi-annual redemptions as the real estate divestments are realised. SEB plans to sell off the properties held on behalf of the fund over the next five years.