Fund Closure Risks of Open-End Real Estate Funds. Issue 4 (2nd October 2022)

• Record Type: Journal Article
• Authors: Schnejdar, Sebastian; Woltering, René-Ojas; Heinrich, Michael; Sebastian, Steffen
• Is Part Of: Journal of real estate research. Volume 44:Issue 4(2022)
• Page Start: 447
• Page End: 472
• Publication Date: 2022-10-02
• Subjects: Fund closure -- open-end real estate funds -- liquidity crisis -- spillover effects; Real estate business -- United States -- Periodicals; Real estate investment -- United States -- Periodicals; Real estate business -- Periodicals; Periodicals; 333.330973
• DOI: 10.1080/08965803.2022.2033392
• Languages: English
• ISSNs: 0896-5803

Abstract

Abstract: Over the past decades, numerous open-end real estate funds (OEREFs) in several countries became unable to maintain the liquidity provision and had to suspend the redemption of fund shares. This paper examines OEREF closures in Germany, the world's largest OEREF market. We find that funds with a larger share of institutional investors had a higher closure probability. This is consistent with the assertion that well-informed investors are able to move more quickly and decisively and therefore trigger additional selling pressure in times of financial turmoil. In contrast, economies of scope appear to prevent closures. In detail, older funds and those sold through physical bank branch networks are less likely to close. Among the factors beyond the control of fund managers are negative spillover-effects resulting from closures of other OEREFs.