He noted that there were actually two results of the crisis--the first time in the sector's 35-year history that funds were frozen. The first was one of "irrational behavior," he says, as investors pulled their claws in and some 7.2 billion euros in capital were lost to the sector. From AXA's own 1.6-billion-euro total equity volume, some 300 million euros of capital went south, he adds.
But the second result is one of perceptions, said Hermanns-Engel, and that could be the most telling. "The crisis itself is over," he told GlobeSt.com in an exclusive interview at Mipim. "But there is a general doubt about the stability of the funds," he stated, "and open-ended funds will never be the same as they were before. They've lost their virginity."
One solution to the perceptions issue is a movement being spearheaded by the industry's lobbying group, Bundesverband der Deutschen Investmentgesellschaften (BVI). The group is advocating standards to govern such investor-critical issues as valuations and transparency. "It will not be easy," said Hermanns-Engel. "These measures have been discussed for years. But the freeze has accelerated those discussions."
Life goes on, however, and AXA is a prime example of reality being ahead of those perceptions. Hermanns-Engel revealed to GlobeSt.com that the firm is preparing to launch a new fund, geared to German institutional players and eyeing a 2-billion-euro gross equity. One of roughly 10 or 12 funds AXA typically launches annually, the new vehicle will also cater to cross-border investors when it hits the market toward the end of Q2.
Other participants in the sector seem to share Hermanns-Engel's cautious optimism. "It was an intensive time, but it has calmed down," said Frank Poerschke, chairman of Commerz Grundbesitz-Investment GmbH. Poerschke, who made his comments during a seminar on global investment markets, said that the coming German REIT regime would not seriously impact the allure of the open-ended fund market. Rather, it will simply "enlarge the universe of investors."
Gordon Black, managing director of international private equity for Heitman in London, said that intensive time was but a hiccup of sorts in the market. Open-ended funds are back, he said, and the crisis is over.
Not so much for Rainer Thaler, recently appointed managing director for GE Real Estate in Frankfurt. While the worst is over, he agreed, he stated that the problem won't truly be solved until those valuation standards are in place.
Hermanns-Engel agreed, and while certain of the standards might seem onerous, "It's better that the industry impose it's own standards than allow the government to do it," he concluded.
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
