The latest UK property fund suspensions – Threadneedle and Canada Life the latest to stop
The UK property sector took another pounding on Thursday as L&G became the latest firm to either cut the value or suspend its UK property fund.
So far Columbia Threadneedle, M&G, Standard Life, Canada Life, Henderson Global and Aberdeen Asset Management have all suspended withdrawals from their funds.
Almost to a one they have said they are suspending their funds because of – wait for it – “market uncertainty” following the EU referendum.
Here’s who has stopped trading as of 15:50 on 7 July:
Standard Life (£2.9bn)
Standard Life suspended trading in its £2.9bn UK commercial property fund on July 5 – marking the first such closure since the financial crisis.
The global investment firm blamed the “exceptional market circumstances” around the decision to exit the European Union for the move which has seen investors banned from withdrawing their money.
It follows a spate of withdrawals following the decision to leave the EU.
A statement from Standard Life read: “The suspension was requested to protect the interests of all investors in the fund and to avoid compromising investment returns from the range, mix and quality of assets within the portfolio,” the company said.
“The selling process for real estate can be lengthy as the fund manager needs to offer assets for sale, find prospective buyers, secure the best price and complete the legal transaction. Unless this selling process is controlled, there is a risk that the fund manager will not achieve the best deal for investors in the fund, including those who intend to remain invested over the medium to long-term.”
“The suspension was requested to protect the interests of all investors in the fund.”
The fund invests in a mix of commercial property including office blocks, shopping centres and warehouses.
Standard Life said the suspension would end “as soon as practicable” and added that it would be reviewing the decision every 28 days.
Aviva Investors (£1.8bn)
Aviva suspended trading on its £1.8bn property fund shortly after Standard Life on July 5 in light of what it sees as “extraordinary market circumstances”.
A spokesman for Aviva Investors said: “The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect.”
Aviva looks set to attempt to sell off property as it tries to increase liquidity in the fund.
According to investment site Trustnet, the Aviva Property Trust holds commercial property assets across the UK.
Roughly a third of its assets are in London and the South East, including offices in the centre of the capital.
It also owns shopping centres in Edinburgh, Manchester and Exeter, and offices in Birmingham.
M&G Investments (£4.4bn)
M&G closed the doors on its £4.4bn fund on 5 July.
M&G, part of UK insurer Prudential, said it had seen a “marked increase” in customers trying to pull out of the portfolio – which includes retail and office space – after the referendum result.
A statement from M&G read: “This will allow the fund manager time to raise cash levels in a controlled manner, ensuring that any asset disposals are achieved at reasonable values.
“The decision to suspend was taken in agreement with the Fund’s Depositary and the Financial Conduct Authority has been informed.
“Orders placed after 12pm on 4 July 2016 will not be processed until the suspension is lifted. M&G will review the suspension every 28 days.”
The M&G property portfolio is a broadly diversified fund which invests in 178 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors.
Henderson Global (£3.9bn)
Henderson Global ceased trades on July 6.
Henderson has a fund of £3.9bn spread across commercial property assets in the UK.
A statement from Henderson said: “With effect from 12 noon on 5 July 2016 Henderson Investment Funds Limited have temporarily suspended dealing in the Henderson UK Property PAIF and its associated Henderson UK Property Feeder Fund due to exceptional circumstances.
“The suspension has been implemented to safeguard the interests of all investors. Uncertainty generated by the European Union referendum has a negative impact on market sentiment and led to substantial withdrawals from property funds.
“The dealing suspension will allow for an orderly sale of some properties and help to ensure that the strong attributes of the portfolio in terms of attributes and mix of properties and quality tenant base are not compromised.”
Columbia Threadneedle (£1.4bn)
Columbia Threadneedle closed the books on its £1.4bn property fund on July 6.
Columbia Threadneedle said: “Columbia Threadneedle aims to ensure the fair treatment of all our investors whether they are transacting now or investing for the longer-term.
“Because the purchase and sale of property assets can be a lengthy process, our portfolio managers maintain a cash balance in the Fund to meet requests from clients who wish to sell their shares.
“We have not been immune to the recent trend of retail outflows from the sector and so far these requests have been met from the cash balance retained within the Threadneedle PAIF.
Columbia Threadneedle said “to mitigate risk the fund is highly diversified by sector.”
Once again it blames uncertainty following the EU referendum, and predicts that retail outflows will continue for some time.
Canada Life (£450m)
Canada Life have now confirmed that they have frozen trading in six of their UK property funds, which together are worth around £450m.
Canada Life owns, amongst others, offices in Reading and London and Magna Park in Lutterworth, Leicestershire.
Spokeswoman Marlene Klassen said: “Given the uncertainty regarding property valuations in the U.K., we have acted to restrict transactions in our U.K. property funds to ensure fairness to both exiting and continuing policyholders.
“Deferring requests to withdraw allows Canada Life to protect the interests of all investors in the property fund, including those who plan to remain invested for the medium to long term.”
Aberdeen Fund Managers (£3.4bn)
Aberdeen Fund Managers cut the value of its property fund by 17% on the night of 7 July and briefly halted redemptions.
Later on Thursday it extended the suspension of its fund to 11 July.
CEO Martin Gilbert said: “Our focus has been, and continues to be, treating all customers fairly. We have worked hard to deliver realistic options to clients: redeem at a price which reflects the relatively penal impact of short term trading in the property market, or remain in the fund, protected by the anti-dilutive measures we are taking, and look through to the longer term fair value which we expect to be available in less pressured markets.
“Reducing the share price of the fund reflects the changing market conditions over the past week or so and uncertainty around prices in the property market; sellers requiring liquidity are having to market properties at sometimes significant discounts to their recent valuations.
“Aberdeen’s property fund continues to hold a good level of cash, which permits us to offer these options to investors, but it is imperative that we protect remaining holders by fairly reflecting the impact of short term trading on values provided to redeeming shareholders.
“The property market itself may take some time to find its level but we believe that the same factors that made property a good long-term investment yesterday remain true today.”
Legal and General has cut its £2.3bn UK property fund by a further 10% following a previous 5% valuation cut.
Total so far aprx £18.2bn
Around £35bn, approximately 7% of the total investment in UK commercial property, is invested in these property funds.