DWS limits payouts from its €4bn Grundbesitz Europa property fund to 10% of requests

Restriction takes effect this week

DWS, the asset manager of Deutsche Bank, has restricted redemptions from Grundbesitz Europa, the largest of its three open-ended property funds. The restriction takes effect on Tuesday, 27 October 2026. Redemption orders falling due that day will be paid in full. From Wednesday, 28 October, investors will receive only 10% of the amount they requested, and the unpaid remainder of each order lapses. DWS said it can adjust that ratio or lift the restriction altogether depending on the fund's liquidity. The measure is provisionally set to run for 12 months, which is also the statutory maximum.

Christian Bäcker, managing director of DWS Grundbesitz, acknowledged that the decision could cause hardship for investors.

“We are aware that the decision to activate the redemption restrictions may cause financial hardship for investors. We regret this.”

Bäcker argued that the restrictions would give the managers time to generate liquidity through orderly sales and possibly earn reasonable returns again later.

Why the fund reached this point

The fund holds roughly €4bn of volume, but that money is tied up in properties that are hard to sell quickly. To meet redemptions, DWS sold eleven properties for about €767 million in the 2025/26 financial year, including older offices and buildings that need heavy investment. Borrowing is also close to its ceiling, with the debt ratio at 29.7% against a permitted maximum of 30%. Occupancy stands at 91.4%, and vacancies are concentrated in offices. The Financial Times reports that the fund has lost more than 10% of its net asset value since January, while Wirtschafts Woche puts the loss at about 10%. Its units trade at roughly half their official redemption value on the Stuttgart stock exchange.

Investors face a steep choice

Investors who do not want to wait can sell their units on the exchange, but only at a steep discount. Those who stay must wait longer for their money. Under the new rules, any unpaid share of a redemption request is not paid out later automatically. Investors who want the remainder must submit a new redemption notice and again allow 12 months. Wirtschafts Woche gives the example of an investor who asked for 100,000 euros and receives 10,000 euros. DWS says its portfolio management will keep selling properties to raise the liquidity ratio, repay loans and eventually lift the payout ratio again.

Wider pressure on German property funds

German open-ended property funds have seen almost €18bn in outflows since the start of 2024, according to Bundesbank data cited by the Financial Times. Some smaller funds have already suspended redemptions entirely this year, while others are racing to sell properties to meet withdrawals. Under German law, investors must give 12 months' notice before redeeming, a rule designed to give managers time to sell slow-moving real estate. Wirtschafts Woche reports that the gating instrument has applied to all open-ended funds since April. The same report says Kenfo, which is also considered Germany's only state fund, is buying property and intends to invest around €1bn in the market over time.