Buying and selling of UniImmo: Global fund units is now possible again, without restrictions. Following a three-month closure, Union Investment Real Estate GmbH has resumed the redemption and issue of units in its international open-ended real estate fund with effect from June 16, 2011.
Given the uncertainty surrounding both the impact on Tokyo of the nuclear accident at Fukushima and the consequences for the city's property market, the external experts commissioned to reevaluate UniImmo: Global's Tokyo properties in March 2011 were unable to do so.
"Expert opinion is that the situation in Fukushima has now stabilised to the extent that Tokyo is extremely unlikely to experience radioactive contamination. The valuation committee has endorsed this assessment," says Dr. Reinhard Kutscher, Chairman of the Management Board of Union Investment Real Estate GmbH.
The experts also conducted their own on-site assessment of the situation in the Tokyo property market, with the result that the requested revaluation was able to take place as at June 15, 2011. This enabled proper calculation of the unit price.
Revaluation of the seven Tokyo properties held by the UniImmo: Global fund resulted in a downward adjustment of 26.5 million. Taking into account an upward correction for a fund property in Singapore, the net valuation adjustment was 20.2 million, resulting in a unit price of 51.60.
The current 12-month performance for UniImmo: Global is -2.59 %, compared to -2.16% when the fund price was last calculated on March 16, 2011. The current valuation adjustment in Japan was largely offset by income growth and write-ups during the three-month closure period. The distribution for the 2010/2011 accounting year, which will take place on 28 June 2011, is 1.40 per unit and thus the same as in the prior year.
Varying fortunes in the post-earthquake Tokyo property market
The external experts assessed the situation on the ground from May 29 to June 1, 2011, revaluing all seven buildings held in Tokyo by UniImmo: Global. Union Investment's revaluation of its Japanese assets, originally requested shortly after the earthquake of March 11, 2011 and now finally carried out, shows that the various sectors of the Japanese property market have reacted in different ways to the environmental and nuclear disaster. The experts identified the need to make significant writedowns for three properties in the UniImmo: Global fund.
In the Unilmmo: Global fund, the value of the Shiomi Koyama office building, which remains unlet, was corrected downwards by 9.5 million (7.3%). The SoLaDo retail property saw its value fall by 13.9 million (14.0%), and one of the fund's smaller residential properties, which provides apartments for non-nationals living in Tokyo, lost 3.1 million in value (26.5%). The properties have been affected by the caution that is clearly apparent among potential tenants, or indirectly hit by weakening consumer demand. The values of the Tokyo properties held by UniImmo: Global were routinely assessed and adjusted by external experts on February 25, 2011, two weeks before the earthquake.
"The revaluation highlights the varying impact of the environmental and nuclear disaster on the Tokyo property market. Demand for earthquake-proof buildings in the five central districts of Shinjuku, Shibuya, Minato, Chiyoda and Chuo has increased following the accident, with rents bucking the trend and remaining stable. In contrast, rents in the outskirts and in retail properties and luxury apartments have come under additional pressure," says Kutscher.
For UniImmo: Global investors, the revaluation represents welcome clarity because the valuation adjustment takes full account of the impact of the exceptional situation in Japan as currently evident. "The quality of our Japan portfolio will allow us to gain maximum traction when the rental market in Tokyo recovers," continues Kutscher.
"UniImmo: Global is an integral part of our product range for private investors. Now that the fund has reopened, there is ever