Large German Fund Freezes Accounts Because Tokyo Real Estate ‘Now Impossible to Value’
March 21st, 2011Via: eFinancial News / Dow Jones:
Fears of a nuclear crisis in Japan have spilled into the commercial property sector with a large German institution suspending a €2.2bn fund as it said its holdings in Tokyo were now impossible to value.
Union Investment, one of the largest German fund managers with €177bn under management, said that the nuclear fallout in Japan has made valuation of its properties too difficult as its surveyors had never had to deal with the threat of nuclear contamination before.
It said that while there is no physical damage to any of Union’s Tokyo properties, the threat of nuclear contamination is unknowable.
It said that it therefore had “no option” but to freeze all buying and selling of units in its Unilmmo Global fund. This means investors can neither withdraw their money nor put any extra in.
In a statement yesterday, the fund manager – which has €19bn of its assets in real estate – said: “With the impact of the nuclear incidents in Japan still unclear, especially at the Fukushima plant, and the economic consequences impossible to predict at present, Union Investment Real Estate GmbH contacted its external experts to request a revaluation of its properties in Tokyo.
“The corresponding expert committee has today informed us that valuation is not possible at the present time given the exceptional circumstances prevailing in the area. Consequently, proper calculation of the UniImmo Global unit price is currently not possible.”
If a daily price of a fund is unavailable, German market rules set by Bafin, the financial regulator, state that an open-ended real estate fund needs to be suspended, Union said.
