Large real estate funds prevent competition from withdrawing money

The big ones real estate funds quickly prevent the withdrawal of money from the funds. This week, the asset manager Eq said that it has postponed the payment date for the redemptions of the Social Real Estate and Commercial Real Estate funds. Asset manager Titanium’s Hoivakinteistö fund also temporarily suspended the payment of redemptions.

With regard to Eq’s Social Property Fund, the transfer concerns redemption orders for the redemption date of December 2024. In the case of the Liikekinteistöt fund, the transfers concern redemption orders for the redemption date of June and December 2024.

“Redemptions will be carried out later at a time to be announced separately to the value of the fund share calculated in that case. Funds’ unit owners are not required to take any measures due to this,” the company said in the terms of the funds on January 6.

Finland According to the Fund Report maintained by the investment research company, Yhteiskuntakinteistöt is the second largest real estate fund in Finland in terms of fund capital. According to the most recent Fund Report describing the situation last November, the fund’s capital was more than 1.1 billion euros. The fund, established in May 2012, had more than 4,100 unit owners in November.

Liikekinteistöt, on the other hand, is Finland’s third largest real estate fund. Its capital is more than 560 million euros.

Yhteiskuntakinteistöt invests in care, service and community properties in Finland, and Liikekinteistöt invests in Finnish office properties. The funds’ income is made up of the rental income of the investment properties.

Eq:n the announcement means that Finland’s three largest real estate funds have now made some kind of restrictions on the shareholders’ ability to withdraw their funds from the funds. In total, almost 10 funds have made such restrictions in the past year.

Finnish real estate funds were already in trouble in 2023, when numerous funds said they were postponing redemptions. The Finnish real estate market has been waiting for a turn for the better for a long time. However, the recently announced closings of funds show that the problems in the real estate sector are not yet abating.

According to the November Fund Report, the total capital of the real estate funds that limited the withdrawal of money after autumn 2023 was almost 4.5 billion euros. The funds have a total of almost 84,000 unit owners. Of course, the owners may have the same owners, but in any case, the issue already affects quite a large number of people.

Also The Titanium Hoivakiinteistö fund, which has temporarily suspended redemptions, is one of Finland’s largest real estate funds.

The fund justified the suspension of payments by the higher-than-normal number of redemption orders and the quiet “real estate transaction market”.

“Redemptions are carried out when the cash required for them has been acquired using the means indicated by the fund’s rules, taking into account the interest of all the fund’s unit owners”, Titanium said in his announcement on Tuesday, January 7.

Titanium’s announcement describes the current situation in the real estate fund market well. According to the most recent fund report, net subscriptions totaling more than 220 million euros were made between January and November of last year to funds that have limited the withdrawal of funds in some way after autumn 2023.

So the Finns would have wanted to withdraw that amount of money from the funds. Not all the money has been paid to the shareholders due to restrictions on the funds. One such a person is the speaker of the parliament Jussi Halla-aho (ps).

Real estate investment funds are so-called special funds. They differ from ordinary investment funds, among other things, in that their holdings are not very liquid like shares, for example. It means that holdings are usually not quick to sell.

That’s why fund shares cannot normally be sold on a daily basis. Redemptions can usually be made only a few times a year, and the money can be withdrawn with a delay of up to six months.

According to the rules, the fund company can also completely stop redemptions for an indefinite period.

Discourse around real estate funds gained momentum at the beginning of the year, when Helsingin Sanomat reportsthat the OP management company temporarily suspends the redemptions and subscriptions of the fund units of its two real estate funds. The decision concerned OP-Palvelukiinteistöt and OP-Vuokratuotto funds.

OP-Vuokratuotto is Finland’s largest real estate fund in terms of fund capital. Its fund capital was approximately EUR 1.1 billion in November 2024. At that time, the fund had more than 38,000 unit owners.