Some UK property funds are postponing investor withdrawals

LONDON, Oct 4 (Reuters) – Some of Britain’s leading open-ended property funds are rolling out new measures to handle investor exit requests as difficulties in honoring redemptions continue to rise amid some asset sell-offs British at risk.

The surge in UK gilt yields last week prompted many UK pension funds to seek cash to meet demands for collateral from specialist fund managers tasked with helping them match liabilities with assets.

Many pension funds have opted to sell bonds to ease their liquidity crises, but others are also looking to reduce their exposure to less liquid assets like short-term real estate, according to industry sources.

Columbia Threadneedle said on Monday it was moving to monthly rather than daily exit requests from its 2.3 billion pound ($2.61 billion) Threadneedle Pensions pooled ownership fund, citing liquidity constraints, the market volatility and “a subsequent increase in redemption requests”.

“We believe the introduction of this procedure is in the best interests of investors in the fund, allowing for an orderly sale of assets to meet redemption requests,” a spokesperson said in a statement, adding that Columbia Threadneedle aims to revert to daily settlement as soon as possible. possible.

Pension funds typically hold a small percentage of their assets in real estate, which can provide regular income like a bond, but also the possibility of growth in capital value over time.

But real estate can be difficult to trade compared to stocks or bonds, which means real estate funds need to have special mechanisms that give managers time to sell assets to cash out investors.

Rival manager Schroders (SDR.L) said it would delay paying most of its UK property fund’s £65.1 million second-quarter redemption requests that would normally have been paid on Oct. 3.

Only £7.8 million would be paid on October 3, Schroders said, with the rest deferred until July 3 or earlier.

Schroders said the postponement decision was made in order to maintain the fund’s minimum liquidity and manage the capital expenditure requirements incurred.

The fund, Schroders Capital UK Real Estate Fund or “SCREF”, was worth £2.7 billion as of June 30.

US fund giant BlackRock has also postponed redemptions of its £3.5bn BlackRock UK Property Fund following an increase in exit requests in the second quarter of this year, a source familiar with the matter told Reuters. case.

($1 = 0.8803 pounds)

Editing by Sinead Cruise; edited by David Evans

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