Exclusive - German property fund to offload London portfolio

LONDON (Reuters) - A German property fund plans to sell a London office portfolio that includes Deutsche Bank's (DBKGn.DE) head office in the capital for about 1 billion pounds, three sources familiar with the matter told Reuters.

The four properties in the portfolio also include blocks occupied by the European Bank for Reconstruction and Development in the City of London financial district and the Thomson Reuters (TRI.TO) building in Canary Wharf.

The KanAm fund is selling due to legislative changes in Germany that are forcing open-ended funds to offload assets and a decision to concentrate on euro-denominated markets.

"Sooner or later we have to gain liquidity in the fund and our London portfolio has some strong assets in it," a spokesman for KanAm told Reuters, declining to confirm the sale, which the sources said was being handled by agent Knight Frank.

German open-ended property funds, which allow investors to withdraw money at any time, will sell more assets after legislative changes in the first quarter of this year make it difficult for large investors to exit at short notice, property broker CB Richard Ellis said in a June report.

Some open-ended funds have temporarily closed to prevent such withdrawals when weak economic conditions mean property prices fall in value. The new laws aim to protect smaller private investors from such closures.

The KanAm fund, which has 4 billion euros (3.5 billion pounds) assets under management, is currently closed for a second time and has until next May to decide whether to allow investors to withdraw money or liquidate, Iryna Pylypchuk, an associate director at CBRE told Reuters.

In September last year, KanAm said it would liquidate its U.S. fund, citing poor liquidity in the country's real estate market.

Other funds currently closed and with the same decision to make by May include the 6.1 billion euro Credit Suisse Euroreal and the 6.2 billion euro SEB ImmoInvest fund, Pylypchuk said. Axa ImmoSelect and DEGI International have a November deadline, she said.

(Reporting by Tom Bill; Editing by Dan Lalor and Andy Callus)