The mechanism behind Germany's property fund crisis

When REFIRE last updated readers on Germany's open-ended property fund sector in Issue 257, Leading Cities Invest had just become the first fund to enter formal liquidation. The situation has since moved quickly. By the end of June, two further funds had followed: Habona Nahversorgungsfonds Deutschland suspended redemptions on 30 June, while Aachener Spar- und Stiftungsfonds — a fund serving primarily church-affiliated institutions — entered liquidation the same day, attracting little public attention.

That brings the total number of suspended or liquidating funds to six. Sector-wide sales of fund units fell to an all-time low of €120 million in April, according to Barkow Consulting. Germany's open-ended property fund sector now finds itself in a darker place than at any point since the post-Lehman closures of 2008-09.