M&G, Aviva join SLI in suspending UK property funds

Added 5th July 2016

Aviva Investors and M&G Investments have suspended trading in their UK property funds, a day after SLI took the same decision, making it three of Britain's top five funds in the sector that have shut their doors since the Brexit vote.

M&G, Aviva join SLI in suspending UK property funds

M&G Investments (M&G), which operates the largest UK property fund said it was forced to temporarily suspend trading in the shares of its £4.4bn ($5.8bn, €5.2bn) M&G Property Portfolio and its feeder fund due to a sharp rise in investors demanding their money back.

"Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the UK commercial property market since the outcome of the European Union referendum," M&G said in a statement.

"Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading," it said.

Control sought

Earlier in the day Aviva Investors said it had suspended dealing with immediate effect in its £1.8bn Aviva Investors Property Trust in an effort to safeguard investors.

The announcements came around 24-hours after Standard Life Investments (SLI) suspended all trading in its flagship £2.9bn UK Real Estate Fund following a sharp rise in redemption requests.

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,” the firm explained."

It added that the suspension will provide Aviva Investors with “greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings”.

More to come

Laith Khalaf, senior analyst at Hargreaves Lansdown said the move by Aviva had signalled that the dominos were starting to fall in the UK commercial property market.

According to Khalaf, investors should focus on the reasons why they invested in the asset class in the first place, as the sector is likely to see further challenging times ahead.

“These managers will now be adding to the supply of commercial properties on the market, which is likely to put downward pressure on prices. Foreign investors might be tempted in by the fall in sterling, but equally they may decide to steer well clear of an economy in limbo,” he added.

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Richard Hubbard

Group Editor

Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.


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