ASI will reopen real estate funds next month

Aberdeen Standard Investments will reopen its real estate funds next month after “careful consideration”.

The fund company announced today (October 19) that it intends to lift temporary suspensions of transactions on its £ 1.6bn Standard Life Investments UK real estate fund and £ 900m Aberdeen UK real estate fund from November 16.

The funds were suspended in March following advice from independent appraisers that it was not possible to provide accurate and reliable appraisals for all the properties held in the funds.

It mirrored the rest of the market. All UK ‘bricks and mortar’ real estate funds available to retail investors – with around £ 13 billion in assets between them – were put on hold in the third week of March at the start of the coronavirus crisis.

But from early September, asset managers were allowed to reopen their real estate funds if they saw fit, following a recommendation from the Royal Institution of Chartered Surveyors to “remove” material valuation uncertainty in the future. the areas of UK real estate.

ASI said today that the removal of the suspension followed “careful consideration of a number of factors”.

These factors included current and expected fund liquidity levels as well as expected cash flow and market liquidity.

George Shaw, Manager of Standard Life Investments UK Real Estate and Aberdeen UK Property Fund, said: “We are delighted to announce our intention to resume trading in both funds from November 16th.

“We recognize that the suspension of transactions will have been inconvenient for investors, however, the decision was made to ensure fair treatment of all clients and clients.

“Despite the market disruption due to the Covid-19 pandemic, we still believe that UK commercial real estate has a role to play in a diversified portfolio for the longer term investor.”

Slow wave of reopening

St James’s Place opened its fund on day one (September 9), while Columbia Threadneedle’s equivalent portfolio was reopened a week later.

The LGIM UK Property fund opened its doors last week (October 13) while the suspension of the Royal London fund has been lifted since the end of September.

Meanwhile, Aviva is monitoring the market as Aegon, Janus Henderson, BMO and M&G Investments keep their funds on hold to allow additional liquidity to be raised.

How it works

Rules announced by the Financial Conduct Authority last year require real estate funds to be automatically suspended when their appraisers find significant uncertainty over pricing 20% ​​or more of their assets.

The wallets were on hold as the coronavirus crisis had caused significant uncertainty in the market.

Meanwhile, the FCA is consulting on rules that would require investors to give notice – potentially up to 180 days – before their investment is redeemed into an open-ended real estate fund.

This is an attempt to reduce the “cash mismatch” between the underlying ownership held in these funds and the daily basis on which investors buy and sell units.

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