Q&A: Running out of time and cash
Why was trading halted in these German property funds? There was concern that too many investors would scramble to withdraw their money, in essence creating a run on the bank. It's difficult for funds that own property to raise cash quickly. Time is needed to sell the property.
Are these three the only German funds affected? No, there were actually six that halted redemptions out of concern they would not be able to keep pace with customer withdrawals.
What happens if the funds don't sell? They could be forced into liquidation. As one analyst told Bloomberg News, investors are emotional. If they think a fund is collapsing, they will race to get their money out. And that will only make the matter worse.
Buildings surrounding one of Berlin's famous landmarks are hitting the auction block.
SEB ImmoInvest, a €6.3 billion (Dh30.08bn) property fund, is looking to sell a 50 per cent stake in a collection of 19 buildings in Potsdamer Platz, the famous square in the heart of the German capital.
The buildings for sale include the Grand Hyatt Berlin and the Arkaden shopping mall, Bloomberg News reports. The value on the entire group of buildings is estimated at €1.46bn.
SEB is one of three German property funds facing liquidation if managers do not raise capital by May. Trading was halted in May last year in SEB ImmoInvest and funds run by KanAm Grund and the asset-management arm of Credit Suisse Group.
Regulators have ordered the funds to raise cash levels before the funds are reopened for withdrawals, prompting each to sell off trophy assets.
KanAm's €3.97bn fund is attempting to sell buildings in London, including the ThomsonReuters headquarters in Canary Wharf, and the Deutsche Bank building on London Wall.
Credit Suisse's fund has already sold a shopping mall in Belgium and two office buildings in Paris.
But the real headliner prize of the sales is certainly SEB's stake in Potsdamer Platz, which has played a key role in Berlin's modern history.
Once the main crossroads for the city, the square was almost destroyed during the Second World War. When Germany was divided, the Berlin Wall ran straight through the square, making Potsdamer a symbol of the Iron Curtain.
Today Potsdamer is a bustling commercial centre and the buildings will certainly draw interest.
Top 5: Berlin hotels
1 Circus Hotel, US$103-$130 a night
2 Schlosshotel im Grunewald, $315-$458
3 Casa Camper Berlin, $219-$349
4 Ritz Carlton, $208-$460
5 Swissotel, $125-$311
Source: TripAdvisor
But all the funds are in a bind. Potential buyers know the funds need to sell assets, which will almost certainly dampen offers. And if the funds jettison their best properties, more investors will look to withdraw their money when trading reopens in May.
The Quote: All free men, wherever they may live, are citizens of Berlin. And therefore, as a free man, I take pride in the words Ich bin ein Berliner. - John F Kennedy, former US president
