German real-estate funds which are under pressure from investors are planning to liquidate about €20 billion ($25 billion) in assets, a move that could put pressure on property values in markets throughout Europe.
Credit Suisse and Kan Am Group announced recently they would liquidate funds with €5.6 billion and €3.6 billion in assets, respectively, including office buildings, shopping centers and other properties in France and Germany.
Meanwhile Skandinaviska Enskilda Banken said it would liquidate a €5 billion fund whose properties include the landmark €1.5 billion Potsdamer Platz office-and-retail complex in the center of Berlin.
The pressure on redemptions came because the financial crisis put the investors under strains. As their redemption demands exceeded the cash of some funds, these funds froze redemptions.
This left some institutional investors concerned, especially those who used the property funds as a substitute for money-market funds but then couldn't use them to park cash for short time periods. The redemption requests became so large that some funds had to be liquidated.
