German open-ended funds (GOEFs) hold EUR 82bn of assets across the globe. But, EUR 17bn of these are to be sold by 2017 by 18 different GOEFs as part of their liquidation process. However, since less than EUR 4bn of the EUR 17bn is required to be sold in Europe before 2016, short-term pricing pressure is expected to be limited.
EUR 5.6bn of European property has already been sold by funds liquidating since 2012. Surprisingly, some GOEFs with later liquidation dates have been active and early sellers. We suspect that many are doing this to take advantage of strong investors’ interest to maximize their sales prices. However, based solely on target liquidation dates, 2017 should record the highest annual sales.
Total 2013 sales were EUR 2.7bn, down only slightly from 2012. However, sales were made from a much wider range of countries. Funds moved away from selling UK and French properties to concentrate their activity across the Benelux, CEE and Southern Europe. 2013 volumes in these latter three sub-regions combined were EUR 1.3bn, up from only EUR 0.1bn in 2012. In 2013, Germany became the most active sales market for liquidating GOEFs. Also, compared to 2012, sales in 2013 have shifted from an average 7% premium to a significant discount of 13% across Europe.
GOEFs in liquidation still hold a portfolio of 4.7 million sq m of European properties, mainly concentrated in Germany (32%) and Benelux (19%) whilst Southern Europe accounts for a further 15%. For 2014 target liquidations are disproportionally larger in these three areas. Actual sales recorded in 2013 for this sub-region reflected a significant discount on book value above 20% in Southern Europe and Benelux and 8% in Germany. We expect a similar discount of 10-30% in 2014. These pending disposals should provide very attractive opportunities for opportunistic funds keen to explore non-core locations across Europe.
Source : DTZ (Groupe UGL)