By Jack Sidders, Neil Callanan & Laura Malsch After trying and failing to sell office buildings from Paris to Frankfurt, Amundi SA is finally nearing a sizable disposal that will help raise cash for investors who want out of its property funds. Blackstone Inc.
AFTER trying and failing to sell office buildings from Paris to Frankfurt, Amundi SA is finally nearing a sizable sale.After trying and failing to sell office buildings from Paris to Frankfurt, Amundi SA is finally nearing a sizable disposal that will help raise cash for investors who want out of its property funds.
For some property funds and developers, “the pressure to sell is insanely high,” said Henning Koch, the chief executive officer of Commerz Real AG, a German fund manager that oversees about €34 billion in real estate and renewables. “Funds are struggling with outflows.” In Germany, many funds are struggling to offload assets because of rules that prohibit them from selling assets significantly below book value. If they do, they’re required to reassess the portfolio or property for sale, which can trigger steep changes in the fund’s value. Some managers are currently considering securing new credit lines from their banks for real estate they own to avoid revaluations of the assets and potential sales, two people with knowledge of the matter said.
In the 1990s, credit and GDP growth dropped by 12 and 4 percentage points respectively when business property values fell more than 40 percent in real terms, according to the Bank for International Settlements. Barkow Consulting founder Peter Barkow, whose firm tracks property fund redemptions in Germany, says there could be “further bumps in the road” for property funds even if it’s unlikely to be a repeat of the financial crisis.
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