Six month after it announced it was selling London’s Corn Exchange office building, Credit Suisse Group AG (CSGN) has confirmed it is liquidating commercial property funds worth more than €700m (£568m).
All 20 properties in the sell-off package are held by Credit Suisse’s CS Euroreal fund and are thought to include the German headquarters of Royal Philips NV in Hamburg. Others assets on offer are prestige office blocks, warehouses and at least one distribution centre. The financial division of Toronto-based Brookfield Asset Management is overseeing the sale.
CSGN is not the only German fund manager off-loading its high-value assets. Property funds across the country began winding down more than €25bn (£20.3bn) of assets in 2010 after investors, shaken by the global financial crisis, sought more redemptions than funds could immediately meet. So far, more than 13 of the 44 funds have suspended redemptions or are liquidating.
According to German regulators, Credit Suisse has until 30 April, 2017, to liquidate its CS Euroreal which the company’s website claims has a current value of €4.3bn (£3.4bn). The fund had €6bn (£4.8bn) in assets when it began liquidating two years ago. Neither CSGN nor Brookfield Finance would comment on the latest sell-offs.
In December last year, Credit Suisse agreed to sell six properties — including the Corn Exchange office building in London — for £255m, more than six per cent below the lots market value. The Beijing-based Reignwood Properties bought the 150,000sq ft Grade A Corn Exchange, off Fenchurch Street, for £92m earlier this year in what was only the Chinese company’s second foray into the London property market. In 2011 it joined forces with Singaporean real estate investment company, KOP Properties, to purchase 10 Trinity Square.
Not surprisingly, insurers, pension funds and sovereign wealth funds are acquiring German commercial property as a way to boost returns at a time when other fixed-income assets are paying low interest rates. A strategy backed by a recent Jones Lang LaSalle survey which expected offices, shops and warehouses worth more than €40bn (£32bn) to be traded across Europe this year — a 30 per cent rise 2013.
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