Property fund with no property stokes anger at Commerzbank

Berlin

COMMERZBANK is facing a dispute over how it has managed a property fund with no properties, which some investors say is unjustifiably holding back hundreds of millions of euros.

A law firm is trying to attract more investors for a campaign against the CS Euroreal fund, which began to wind down in 2012.

The fund, which once had 6.2 billion euros (S$9.5 billion) of investments, sold off its final two properties in 2019, but has set aside money for potential belated losses.

Robert Peres, who runs a law firm of the same name, said CS Euroreal should immediately return 350 million euros of its 510 million euros in provisions, which "are excessive by any industry standard", said an emailed statement on Tuesday. He represents investors who own about 10 per cent of the fund.

A spokesperson for Commerzbank had no immediate comment.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

Mr Peres said the provisions mean the bank and its partners can continue to charge fees for managing the remaining funds, having levied 240 million euros since the fund began to wind down. Banks managing real estate funds typically charge fees based on assets.

Commerzbank took over the process from Credit Suisse Group in 2017.

The fund currently has a negative yield of about 800 million euros even if it paid out the entire remaining liquidity, Mr Peres said.

Some of the fund's former properties include the Plantation Place South office building in the City of London and the T8 office tower in Frankfurt.

The dispute is the latest issue for Commerzbank, which is going through a boardroom overhaul.

Hans-Joerg Vetter resigned as chairman this month for health reasons and a second board member, Andreas Schmitz, abruptly stepped aside on Thursday, prompting the bank to postpone its annual meeting.

Commerzbank also said earlier in the week it will probably post its second consecutive loss this year as it grapples with more than US$1 billion costs to restructure the business, while provisions to cover bad loans remain elevated. BLOOMBERG