LONDON (Reuters) – Aegon Asset Management has shut down 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 last month by Aviva.
Aegon funds were put on hold in March 2020, in line with much of the UK real estate fund market, due to uncertainty surrounding market valuations in the wake of the COVID-19 pandemic.
“It has proven increasingly difficult to raise sufficient liquidity while ensuring that loyal 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 the proceeds to investors as quickly, in a fair and orderly manner as possible.”
The Aegon Property Income fund had 380 million pounds ($ 530.7 million) in assets under management and the feeder fund’s assets under management were 150 million pounds, according to Morningstar.
Aegon said in a separate backgrounder that he expects to start distributing around 40% of the money stuck in the funds to investors in the third quarter. It would take between 12 and 24 months to complete the cast, Aegon added.
Most of the suspended real estate funds reopened after the real estate markets stabilized at the end of last year.
But Aviva Investors also shut down its UK real estate funds in May, citing economic uncertainty.
The Financial Conduct Authority has proposed replacing the typical daily redemption notice period for open-ended real estate funds with a notice period of up to six months to avoid blockage of funds due to a rush to exit in times of crisis. Marlet.
These funds are generally owned by individual investors.
“With pending regulatory changes and uncertain prospects 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.
($ 1 = 0.7161 pounds)
Reporting by Carolyn Cohn; Editing by Karin Strohcker and Jan Harvey