Finnish financial services group OP Financial Group announced on December 31, 2024, the temporary suspension of redemptions and subscriptions for two of its real estate funds, OP-Vuokratuotto and OP-Palvelukiinteistöt. The decision was made by OP-Rahastoyhtiö Oy’s board to protect investors’ interests during a period of significant instability in the real estate market.
According to OP, the decision aims to prevent the funds from selling high-quality real estate investments at prices significantly below fair market value. Large-scale real estate transactions have been scarce, and the lack of liquidity in the market has raised concerns about achieving equitable treatment for all fund participants.
The suspension applies to all redemption requests submitted since July 2024, totaling over €70 million. These requests will only be processed once the funds reopen, with no specified timeline for the resumption.
OP-Vuokratuotto, Finland’s largest fund primarily investing in residential properties, manages a portfolio of approximately 5,400 residential units and 21 commercial properties. With an asset value of €1.1 billion and over 38,000 investors, the fund has faced a one-year return of -8.4%.
Similarly, OP-Palvelukiinteistöt manages 55 properties, including 2,800 customer spaces and 287 rental apartments, with half of its assets located in the Helsinki metropolitan area. The fund has an asset value of €359 million, 13,000 investors, and a one-year return of -1.2%.
OP cited the prolonged exceptional conditions in the real estate market as the primary reason for the suspension. The move ensures the funds are not forced to liquidate properties at unfavorable prices to fulfill redemption requests, which could exacerbate declining property values.
Juha Takala, Managing Director of OP-Rahastoyhtiö, emphasized the importance of protecting all investors. He explained that leveraging debt to honor redemptions was considered but ultimately rejected, as it would not have ensured equitable treatment among fund participants.
OP stated that the funds would resume operations once market conditions stabilize, with ongoing assessments of the situation. “We are already seeing cautious signs of increased activity in individual property transactions,” Takala noted.