DWS, Deutsche Bank's asset manager, said the flagship Grundbesitz Europa property fund will meet only 10% of withdrawal requests from Tuesday. DWS said on Monday that the fund will cancel 90% of each investor's redemption requests to conserve liquidity. Grundbesitz Europa holds just over €4 billion and is the largest of DWS's three open-ended property funds. The restrictions are provisionally set for 12 months and aim to prevent a complete suspension of redemptions.
Grundbesitz Europa has lost more than 10% of its net asset value since the start of the year. Redemption requests, slow property sales and borrowing near statutory limits have caused a liquidity shortage. Declining real estate prices are increasing pressure on Germany's €100 billion property fund industry. DWS's funds are among those most affected by investors withdrawing from Germany's open-ended property funds. Bundesbank data show that the sector has recorded almost €18 billion in outflows since the beginning of 2024. Some smaller funds have halted redemptions entirely this year. Other funds are trying to accelerate property sales to meet withdrawal requests.
German law requires investors to provide 12 months' notice before redeeming shares. The notice requirement was introduced to help fund managers manage liquidity because property sales take a long time. DWS has invoked additional measures introduced earlier this year that permit tighter payout restrictions to avoid closing funds entirely to redemptions.
Christian Bäcker, DWS's head of European real estate portfolio management for retail clients, acknowledged that the restrictions could cause investors financial hardship and expressed regret. Bäcker said the restrictions would give managers time to raise liquidity through orderly sales and potentially restore reasonable returns in the future. Investors who do not want to wait can sell shares on a stock exchange, but at a substantial discount. Grundbesitz Europa shares trade on the Stuttgart stock exchange at approximately half the official redemption value.
DWS to Honor Only 10% of Redemption Requests for Flagship Property Fund
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DWS, Deutsche Bank’s asset manager, will honor just 10% of redemption requests for its flagship property fund, Grundbesitz Europa, starting Tuesday. The fund faces liquidity challenges amid a €18 billion outflow from Germany’s open-ended property fund industry since early 2024. With net asset value down 10% year-to-date and borrowing near limits, DWS has imposed 12-month restrictions to avoid a full suspension. Investors are advised to monitor altcoins to watch as liquidity remains a key concern in alternative markets.
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