Property funds: The post-Brexit effect continued
26 September 2016 by Jordan-Ray Bennis
Following June’s referendum, uncertainty surrounding the stability of the UK property market was at its peak. We were told to expect reduced foreign investment, falling prices, the relocation of business to Europe and, as a result, waning demand for commercial tenancies. Unsurprisingly, Britain’s decision to leave the European Union sparked fear among investors who, in a desperate effort to withdraw their money, caused a number of the UK’s largest commercial property funds to be suspended.
Values fell at a less alarming rate last month and, while some banks are still advising clients to avoid UK property, concerns about the effect of independence on commercial real estate seem to have eased. Columbia Threadneedle is due to reopen its £1.4bn authorised investment fund for trading this afternoon, which was ‘gated’ in early July to protect investors and limit outflows in the aftermath of the referendum. Since then, the firm has ‘completed, exchanged or agreed to sell’ 25 properties for a total of £167m in order to generate liquidity.
Threadneedle announced its intention to lift the suspension two weeks ago, citing market stabilisation and the ability to satisfy a normal volume of redemption requests. It now joins Aberdeen Asset Management and Canada Life, which were the first investment companies to reinstate their open-ended property funds following the post-Brexit freeze. In a statement, Don Jordison, Managing Director of Property at the firm, said, “we are pleased to open the fund again and believe this is in the best interests of our customers.” He went on to say that the interests of the firm’s investors are ‘paramount’ and that it would continue to monitor closely market conditions to ensure their protection.
Henderson Global Investment will be the next asset manager to lift the suspension, having confirmed plans to recommence trading on its ‘Property Authorised Investment Fund’ next month. It will be the fourth firm to do so, leaving only Aviva Investors, M&G and Standard Life to follow suit.
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