Europe’s real estate revolution

Enterprising approach for pub sectorWHEN DEUTSCHE BANK decided not to provide a liquidity injection to its $7.2 billion Grundbesitz Invest open-ended property fund to protect it from a revaluation at the end of 2005, something was clearly afoot in the world of German real estate finance. This kind of thing simply isn’t done – German sponsor banks have always stepped in to buffer these property funds. Deutsche, however, decided simply to offer compensation to investors that had bought in over the previous two years. The move – while triggering a crisis in the open-ended fund sector that is only now abating – has been seen by some as a sign of things to come: the mere fact that real estate investment trust legislation is being discussed in a country can be enough to change established patterns of behaviour among both lenders and property companies. And this is just the situation...