Investors in the Aachener Spar- und Stiftungs-Fonds are facing a significant change to their investment. Aachener Grundvermögen Kapitalverwaltungsgesellschaft mbH (Aachener Grundvermögen) has terminated its management of the real estate investment fund with effect from 30 June 2026 at 24:00 pursuant to § 99(1) Kapitalanlagegesetzbuch (KAGB, German Capital Investment Code). This has initiated the winding-up of the fund.
The Aachener Spar- und Stiftungs-Fonds was launched in 2011 and invested predominantly in commercial real estate, particularly retail and commercial properties in German city centres and elsewhere in Europe. One distinctive feature of the fund is its investor base: it was aimed at tax-exempt German foundations with legal capacity.
Increased Redemption Requests from Investors
As the reason for terminating its management of the fund, Aachener Grundvermögen states that, despite its distribution efforts, the fund did not reach the economic scale required to remain viable as a retail fund over the long term.
This development was driven in particular by investors’ redemption requests and the resulting liquidity requirements. This gives rise to a structural problem for an open-ended real estate fund: while investors generally have the option of redeeming their fund units, real estate cannot readily be sold at short notice. If there are insufficient liquid funds to meet redemption requests while also ensuring the proper management of the properties, the fund’s liquidity position may come under considerable pressure.
The termination of the management mandate means that the fund’s previous strategy will no longer be pursued. Instead, the focus will be on realising the real estate portfolio and subsequently distributing the fund assets to investors.
How Will the Fund Be Wound Up?
The legal basis for terminating the management of the fund is § 99(1) KAGB. Under this provision, a management company is entitled to terminate the management of an investment fund. Once the termination takes effect, there is a statutory obligation to wind up the investment fund and distribute the remaining assets to investors.
The winding-up process generally takes place in several stages.
Termination of Regular Fund Management
The regular management of the fund will end upon termination on 30 June 2026. The previous investment strategy will no longer be pursued. In particular, the focus will no longer be on the long-term management and development of the real estate portfolio within a continuing fund, but on realising it on commercially reasonable terms.
Sale of the Properties
The principal element of the winding-up process is the sale of the properties held by the fund. The properties must be valued, offered on the market and sold to suitable purchasers. It is crucial that the sales take place on commercially reasonable terms and that the investors’ interests are taken into account.
However, the sales process may take a considerable amount of time. Particularly in the case of larger commercial properties, the purchase prices that can be achieved depend on general developments in the real estate market, the financing position of potential purchasers, the condition of the properties and the respective letting situations.
Distribution of the Sale Proceeds
The proceeds generated from the property sales will initially flow into the fund assets. These funds must be used, among other things, to settle existing financing liabilities, ongoing property management costs and other obligations of the fund. Costs directly associated with the winding-up process and the property sales may also reduce the assets available for distribution.
Only the assets remaining thereafter will be available for distribution to investors. Pursuant to § 258(4) KAGB, where the management of a real estate investment fund is terminated, investors are generally to receive semi-annual interim payments from the sale proceeds. This is subject to the condition that the funds are no longer required for the proper management of the properties or to cover other obligations.
Investors will therefore not necessarily receive their invested capital back in a single payment. Instead, payments are expected to be staggered over time in line with the progress made in realising the assets.
Completion of the Winding-Up Process
The winding-up process will not be complete until the fund assets have been fully realised, all liabilities and winding-up costs have been accounted for, and the remaining assets have been distributed to investors. It is currently not possible to determine reliably when the process will be fully completed.
What Does the Winding-Up Mean for Investors?
The winding-up process has direct economic and financial consequences for the foundations concerned.
No Further Regular Redemption of Fund Units
One of the most important consequences is that investors will no longer be able to redeem their fund units through the regular redemption arrangements previously available. The winding-up process is not equivalent to an ordinary redemption of fund units. Instead, investors must await the realisation of the fund assets and will receive their respective share of the remaining assets as part of the winding-up process.
Redemption orders already submitted may also be affected by the termination of the fund management mandate. The specific treatment of redemption requests already submitted will be governed by the relevant statutory and contractual provisions and the investor information.
For institutional investors, this primarily means a significant restriction on their liquidity planning.
Risk of Financial Losses
Another key consideration is the risk that investors may not recover their originally invested capital in full. Ultimately, the decisive factor will be the sale prices that can be achieved for the properties. If the properties have to be sold below their previous market values, this may adversely affect the remaining fund assets.
There are also financing liabilities, transaction costs, ongoing management costs and other winding-up costs. The amount ultimately available for repayment will therefore not be known until the fund assets have been fully realised and the final accounts have been prepared.
Impact on the Foundations’ Activities and Asset Management
The winding-up process is particularly relevant to foundations whose asset management is geared towards long-term returns and the continuous financing of their charitable purposes. The loss of regular fund distributions and the restricted availability of the invested capital may make financial planning considerably more difficult.
Foundations may need to adjust their liquidity planning, identify alternative sources of income or review planned funding measures.
It must be borne in mind that foundations are generally subject to specific requirements regarding the permanent preservation of their endowment assets and the financial sustainability of their investments. The winding-up process may therefore not only result in a financial loss but may also affect the fulfilment of the foundation’s respective purpose.
What Legal Options Are Available to Institutional Investors?
Although the termination of fund management is generally provided for by law, this does not mean that investors must accept all of the resulting consequences without objection.
Institutional investors in particular should examine whether the winding-up process is being conducted properly and whether they may have claims against the management company or other parties involved.
Various potential legal grounds may be considered in this context.
Review of Proper Fund Management
It should first be investigated whether the management company complied with its statutory and contractual obligations throughout the fund’s entire term.
Management companies are subject to extensive statutory duties. These include, in particular, the duty to manage the fund assets properly, safeguard investors’ interests and comply with the statutory requirements of the KAGB.
A legal review may focus in particular on the following questions:
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Were the fund assets managed in accordance with the investment terms and the defined investment strategy?
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Were the risks associated with the real estate investments and the liquidity position adequately monitored?
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Was timely action taken in response to increasing redemption requests and a deteriorating liquidity position?
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Were investors informed promptly and comprehensively about material economic developments?
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Were possible alternative courses of action to avoid winding up the fund adequately considered?
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Were investors’ interests adequately taken into account when deciding to terminate the management mandate and subsequently realising the real estate portfolio?
In particular, the development of redemption requests and the question of when an economically problematic situation first became apparent may be relevant to a potential assessment of liability.
However, adverse fund performance or the subsequent winding-up of the fund does not, in itself, give rise to a claim for damages. The decisive issue is whether specific breaches of duty occurred and whether they caused the loss suffered.
Review of Potential Claims for Damages Against the Management Company
Another option is to examine potential claims for damages. Such claims may be based, in particular, on the management company’s statutory duties under the KAGB and the general rules of civil liability.
A claim may be available, for example, if the management company breached its statutory duties and investors suffered financial loss as a result.
Potential issues to be examined include:
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Errors in the management and administration of the fund assets;
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inadequate consideration of liquidity risks;
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delayed responses to identifiable adverse economic developments;
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inadequate or inaccurate investor information;
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breaches of duty in connection with the realisation of the properties;
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conflicts of interest or inappropriate decisions to the detriment of investors.
With regard to the property sales in particular, it will be crucial to determine whether the assets are realised under reasonable market conditions.
A sale below the most recently determined market value does not automatically constitute a breach of duty. Rather, it must be examined whether the sale prices achieved were reasonable in light of the specific market conditions and whether investors’ interests were adequately taken into account.
Review of Potential Claims Arising from Deficient Disclosure and Advice
Under certain circumstances, institutional investors may also assert claims arising from unsuitable investment advice or inadequate disclosure. However, a distinction must be drawn between the management company, the fund distributor and any other investment intermediaries.
If defective advice or a prospectus defect can be established, the usual legal remedy is the unwinding of the investment:
In particular, the following should be examined:
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What information was provided to the foundations before they made their investment decision?
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Were the specific risks of an open-ended real estate fund adequately explained?
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Were investors informed about potential suspensions of redemptions and liquidity problems?
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Was the information concerning the investment horizon, liquidity and risk structure accurate?
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Were the foundation’s particular requirements regarding the availability of its assets taken into account?
A differentiated assessment is particularly necessary in the case of institutional investors.
Foundations often have their own asset management structures, investment committees or external advisers. However, this does not automatically mean that all disclosure and advisory duties cease to apply.
Conversely, the institutional experience, professional expertise and specific knowledge of the investor concerned may play a significant role in the legal assessment.
Rights in Connection with the Realisation of the Fund Assets
Legal safeguards for investors also remain in place during the ongoing winding-up process. In particular, the realisation of the properties and the subsequent distribution of the fund assets must be carried out with due regard for investors’ interests.
Investors should therefore pay particular attention to the following points:
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Verifiability of the property valuations;
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appropriateness of the sale prices achieved;
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transparency of the sales processes;
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amount and composition of the winding-up costs;
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use of the sale proceeds;
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calculation and amount of interim payments;
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equal treatment of investors.
Investors have a legitimate interest in being informed about the fund’s development and the key steps in the winding-up process.
If there are specific doubts as to whether the winding-up process is being conducted properly, a legal review should be undertaken.
Special Considerations for Institutional Investors and Foundations
When assessing the Aachener Spar- und Stiftungs-Fonds from a legal perspective, the special status of its investors must be taken into account.
Unlike traditional retail funds for private investors, the fund is aimed at tax-exempt German foundations with legal capacity. This group of investors generally pursues a long-term asset strategy. The investment decision is frequently intended not only to generate returns but also to ensure the foundation’s long-term financial capacity.
This gives rise to several special considerations:
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Individual review of the investment decision: The circumstances under which the respective foundation invested in the fund should be examined. Particular attention should be paid to the investment guidelines, the resolutions adopted by the competent foundation bodies and any external advisory relationships.
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Importance of the long-term investment horizon. The winding-up process may result in the invested capital remaining tied up for significantly longer than originally planned. This may be particularly problematic if the foundation relies on regular distributions to finance its funding measures.
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Responsibilities under foundation law: The responsible foundation bodies must assess the impact of the winding-up process on asset management and the fulfilment of the foundation’s purpose. The asset strategy may need to be adjusted. At the same time, potential claims for damages should be examined to ensure that avoidable losses to the foundation’s assets are not left unaddressed.
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No automatic restriction of investor rights due to institutional status: The fact that the investors are institutional investors does not mean that they must forgo the statutory protection afforded by the KAGB or any potential civil law claims. However, the investors’ institutional status and the specific contractual arrangements may give rise to particular considerations that must be taken into account in the legal assessment.
Investors Should Have the Winding-Up Process and Their Rights Reviewed
The winding-up of the Aachener Spar- und Stiftungs-Fonds presents the foundations concerned with significant economic and legal challenges.
The termination of the fund management mandate as of 30 June 2026 means that the previous fund structure will not be continued. Instead, the properties must be sold and the proceeds distributed to investors after all liabilities and costs have been taken into account.
For investors, this initially means restricted access to their invested capital. There is also a risk that the final repayments will be lower than the amount originally invested.
However, institutional investors should not regard the situation solely as an unavoidable consequence of difficult economic conditions in the real estate market. Instead, a comprehensive legal review of the fund management, the investor information and, in particular, the development of the liquidity position over recent years is advisable.
MTR Legal advises companies, foundations, investors and high-net-worth individuals on matters of capital markets law. Further information is available under Legal advice on capital markets law.
