January 14--Deutsche Bank decided to freeze its $7.2 billion Real Estate Fund in mid-December, shocking Germany's $100 billion real estate fund industry and preventing the fund's 300,000 shareholders from selling their holdings. The move followed rising concern among investors at Deutsche Bank's announcement of an unscheduled revaluation of the fund. Investor uncertainty began spreading to other real estate funds, many of which had already been hit by a four-year downturn in German commercial property. Deutsche bank also barred investors in its Grundbesitz-Invest fund from selling their holdings, saying it needed until February to determine if the investments are valued correctly. Germany's banking industry fears that a major write-off of property funds could destroy investor confidence, creating a domino effect across the industry. Although Bundesbank officials are seeking to reassure investors that Germany's banks can withstand any shocks to the funds, the Federal Financial Supervisory Authority has ordered fund managers to supply daily updates on outflows. Real estate funds are the third most-popular form of investment in Germany, after stocks and bonds.

Source: Private Banker International (Jan. 11, 2006)
Note: Abstract provided by NAR’s Information Central