Aegon Asset Management Closes $700M UK Property Fund, Real Estate News, ET RealEstate

LONDON: Aegon Asset Management has closed its UK Property Income and Property Income feeder funds after failing to raise enough cash to meet redemption requests, it said on Wednesday, following a similar decision taken the month latest by Aviva.

Aegon funds were suspended in March 2020, in line with much of the UK property fund market, due to uncertainty surrounding market valuations following the COVID-19 pandemic.

“It has proven increasingly difficult to raise sufficient cash while ensuring permanent investors have a representative and well-balanced portfolio,” the fund manager said in a statement.

“In order to ensure that all investors are treated fairly, Aegon AM has decided to take steps to close the funds and return proceeds to investors as quickly as possible in a fair and orderly manner.”

The Aegon Property Income fund had 380 million pounds ($530.7 million) in assets under management and the AUM of the feeder fund was 150 million pounds, according to Morningstar.

Aegon said in a separate fact sheet that it hopes to begin distributing about 40% of the cash locked up in the funds to investors in the third quarter. It would take between 12 and 24 months to complete distribution, Aegon added.

Most of the suspended property funds reopened after property markets stabilized late last year.

But Aviva Investors also closed its UK property funds in May, citing economic uncertainty.

The Financial Conduct Authority has proposed replacing the typical daily redemption notice period for open-ended property funds with up to six months’ notice to prevent funds from locking up due to a run. exit in times of market crisis.

These funds are generally held by retail investors.

“With pending regulatory changes and an uncertain outlook for commercial real estate…times are only going to get tougher for real estate funds,” said Oli Creasey, real estate research analyst at Quilter Cheviot.