On the basis of scheduled liquidation dates, Cushman & Wakefield research identifies that 2017 would see the highest volume of sales with €6.6bn. Next year could also expect strong activity from liquidating funds on the selling side, with €3.2bn of assets likely sold.
The planned €9.9bn of asset disposals reflects 12% of the aggregate assets under management in the GOEFs universe. European assets will account for the overwhelming majority of disposals with the €9.9bn of sales, including 75% from three jurisdictions. See full list of GOEFs in liquidation below this article.
- Germany (31%);
- the Benelux (26%); and
- France (18%).
The liquidation of GOEFs has already provided the market with €14bn of sales since 2012, according to a teaser of the Cushman & Wakefield research released today, including €1.7bn of commercial property assets in the first half of 2015.
Cushman & Wakefield reported that on average the assets sold so far by the GOE funds have reflected significant discount over book values, ranging from -24% for the funds to be liquidated in 2013 to a flat 0% for the ones to be closed in 2016.
Premium over book value have also been achieved by a majority of assets sold by funds to be liquidated in 2017 with the notable exception of the German part of their portfolio sold at a 6% discount.
Regulatory changes have made many GOEFs less attractive for institutional investors, forcing some to decide to liquidate following a redemptions freezing period.
Every fund intending to sell its portfolio will aim to get the best price possible before its mandate expires, given the prevailing economic and investment market environment. To achieve this goal, the funds have a time window within which sales must be achieved.
The length of the time window varies significantly among them. All properties not sold within the fixed time frame will go over to the Depotbank, an independent custodian of the assets, which will complete the liquidation process.
Magali Marton, Head of EMEA Research at Cushman & Wakefield, said: “German Open-Ended funds have clearly benefitted from the current booming investment market in Europe and therefore have managed more successfully their assets sales in 2015 so far.
“Depending on the country, the pricing achieved to book value has ranged from a -26% discount in the Benelux to a premium of 47% for assets traded in the UK, with German assets sales reflecting a 6% discount.
“We expect sales to grow in the rest of the year and in 2016 and GOEFs should continue to demonstrate some proactivity in their liquidation process in order to optimize their sales prices strategy. They still hold €9.9bn of assets across the region with a large part located in Germany, the Benelux and France.”