Press release BoxID: 556874 (Aberdeen Asset Management Deutschland AG)
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  • Robert Bauer
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Degi German Business to be regularly wound down

Liquidation is believed to be the best solution for ensuring equal treatment of all investors

(PresseBox) (Frankfurt am Main, ) Aberdeen Immobilien Kapitalanlagegesellschaft mbH has announced that it has given notice to terminate the management of the Degi German Business open-end property fund with effect from 20 November 2015 and is preparing the fund for regular liquidation. The fund was successfully launched on 1 December 2006 as an open-end property fund for institutional investors - insurance companies and pension funds, but also trusts, family offices, funds-of-funds and asset managers - as an option to invest in a broadly diversified German portfolio. The regular liquidation will ensure that all investors receive equal treatment, irrespective of the level of their investment.

Financial crisis had serious impacts on portfolio development
Back in February 2009, impartial rating agency Scope had awarded the fund a rating of AA-minus. Up to the end of fiscal 2009/2010 (30 June 2010), fund management had generated a return of 4.2 percent on average since inception. Degi German Business was not, however, able to escape the financial crisis when the international financial and real estate markets slumped from the end of 2008 onwards. The values of the properties held by the fund were hit by the crisis and adversely impacted fund performance.

Aberdeen worked with investors to identify solutions
Redemption of Degi German Business units was suspended on 30 November 2010, prompted by announcements of intended redemption, which it would not have been possible to service with the available cash flow. In order to optimize performance, the fund concept had envisaged a comparatively low cash quota within the legally permissible boundaries right from the start. The lion's share of redemption demands stemmed from the shift in preference of many institutional investors towards increased liquidity. Aberdeen has since been working with the investors to identify solutions, but ultimately regular liquidation emerged as the best option for protecting the interests of the investors. Aberdeen intends to continue its close communication with the known investors right up to final liquidation.

Four fund properties have already been sold
As part of the requisite process for generating cash flow, four properties generating proceeds of about 55 million euro have meanwhile been sold since the suspension of redemptions. This cash flow was not, however, sufficient to service the redemption applications. The management of Aberdeen Immobilien Kapitalanlagegesellschaft mbH has therefore decided to terminate the management of the fund with effect from 20 November 2015 and to wind Degi German Business down to enable repayment of both the equity and the debt capital. Two payouts are scheduled each year at six-monthly intervals, starting in April 2013. The termination of management means that the liquidation of the fund and, as such, the suspended redemption and issue of unit shares are final.

Firm contract negotiations for the sale of further properties
The fund currently still holds 17 properties constituting net assets of 219 million euro. The cash quota is about 8 percent. Since redemption was suspended, the properties in Potsdam, Bonn, Mannheim and Speyer have been sold. Purchase contracts have been signed for two further properties with an aggregate market value of about 49 million euro. The marketing process for further real estate holdings has already been initiated. Fund management has been making every effort to rent the holdings, and will continue to do so unabated until the liquidation of the fund is completed.

Aberdeen Asset Management Deutschland AG

Aberdeen Asset Management is a pure asset management company that has been listed on the London Stock Exchange since 1991 (and in the FTSE-100 since 2012). The company was originally incorporated in Aberdeen/Scotland in 1983. Aberdeen invests globally in the four main asset classes of equities, bonds, real estate and alternative investments on behalf of its clients. Nowadays the company manage assets of about 232 billion euro, of which 24 billion euro are invested in real estate (as of 31 August 2012).