Hamburg-based Union Investment Real Estate has temporarily suspended redemption of units for its open-ended real estate fund UniImmo, citing the nuclear tragedy in Japan.

Around 14% of the fund’s EUR2.83 bn of assets under management (AUM) are in Tokyo, representing a significant chunk of the fund’s investments. An additional 15.6% is invested in Germany, with 40.8% elsewhere in Europe, 22.2% in the Americas and 21.3% in Asia (including 14% in Japan).

'We don’t have a timeline for the freeze on redemptions - yet. The market in Japan is not functioning at the moment, so until that stabilizes and the direct threat posed by the nuclear plant subsides, we can’t do much,’ Reinhard Kutscher, chairman of the board of Union Investment, told PropertyEU.

‘It’s too early to say what this means for our investment in Asia. Obviously, Japan is the only core market in that region. Asia is still a very interesting region for us but it is volatile - as we have seen - so you have to be cautious. We will wait and see what it looks like once the dust has settled before we decide on further investment,’ he added.

The redemption of units will remain temporarily suspended until a fair price for the units can be calculated again following proper determination of the market value of the fund’s Japanese properties. No fund price will therefore be published until further notice, Union Investment said in a statement. Germany’s Financial Supervisory Authority (BaFin) has been notified of the temporary suspension.

‘The first step [after the market stabilizes] will be for our appraisers to re-value our seven buildings in Tokyo (two offices, four residential properties and one retail property). Once we have the new values, we can assess the unit value for our fund again. Our property managers have checked our buildings in Tokyo and only reported minor damage, such as small cracks, for which we are insured,’ Kutscher added. Union Investment does not intend to suspend redemptions for other real estate funds with properties in Tokyo because they do not hold significant investments there.