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Fund Closure Risks of Open-End Real Estate Funds

Author

Listed:
  • Sebastian Schnejdar
  • René-Ojas Woltering
  • Michael Heinrich
  • Steffen Sebastian

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.

Suggested Citation

  • Sebastian Schnejdar & René-Ojas Woltering & Michael Heinrich & Steffen Sebastian, 2022. "Fund Closure Risks of Open-End Real Estate Funds," Journal of Real Estate Research, Taylor & Francis Journals, vol. 44(4), pages 447-472, October.
    • Handle: RePEc:taf:rjerxx:v:44:y:2022:i:4:p:447-472
    DOI: 10.1080/08965803.2022.2033392
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