Berlin-based rating agency Scope said it had examined in detail the cash inflows and liquidity ratios of 20 German open-ended mutual real estate funds as of 31 December 2019, and found that despite high net inflows, around €10 billion during 2019, the average liquidity ratio weighted by fund assets barely changed, at 20.2% at end-2019 versus 20.3% a year earlier.
The stability of liquidity ratios is due to effective ongoing liquidity management – currently, nine of the 20 funds, managing about €100 billion in assets, have quotas and hence investment in them is limited – along with buoyant investment activity.
Two of the four fund heavyweights, with volumes greater than €10 billion, have liquidity ratios of more than 20 % - UniImmo: Deutschland (24.3%) and Deka-ImmobilienEuropa (21.1%). The other two follow with 19.1% (hausInvest) and 16.8% (UniImmo: Europa).
With a high net inflow of around €2 billion in 2019, grundbesitz europa had the strongest rise in the liquidity ratio, from 22.5% to 29.7%. This was because it was one of the few funds that were open to investors throughout the last year.
Among the large-volume funds, Deka-ImmobilienGlobal had the biggest decline in the liquidity ratio, by four percentage points (from 21.4% to 17.4%).
Given the current ongoing low interest rate environment, Germany’s open-ended real estate funds continue to enjoy popularity. The funds’ average return last year was 3.1% – well outperforming government bonds and time deposits. Their relative appeal was a major reason for the high inflows: all active open-ended real estate funds saw much higher levels in 2019 than in the previous year, with the net amount totalling €10.3 billion (2018: €6.4 billion; 2017: €6.6 billion).
Wohnen ZBI had the highest net inflow in 2019, with €2.2 billion, followed by grundbesitz europa and hausInvest with €1.9bn and €1.4 billion, respectively. The combined net inflow of these three funds, at around €5.5 billion, accounted for more than half of all net inflows.
Despite net inflows of €1.4 billion, the liquidity ratio of hausinvest fell slightly from 21.9% in 2018 to 19.1% at the end of 2019. The reason was that hausinvest bought many new assets in 2019 – among them, the Millenium Portfolio from Generali Lebensversicherung AG, composed of 49 German properties.