Three more fund managers shutter UK RE funds as Brexit crisis deepens

Three more investment managers today called a halt on redemptions from their open-ended UK real estate funds, bringing the total number of firms with frozen property funds in the wake of the Brexit vote to six.

This afternoon (6 July), Henderson Global Investors announced that it had temporarily suspended dealing in its £3.9 billion ($5 billion; €4.5 billion) Henderson UK Property PAIF and its feeder fund “due to exceptional circumstances”.

Columbia Threadneedle shuttered its £1.3 billion UK Property fund as of midday today. “We have not been immune to the recent trend of retail outflows from the sector and so far these requests have been met from the cash balance retained within the Threadneedle PAIF,” The company said.

Canada Life also announced that it had decided to defer requests for withdrawals from its UK property funds. The firm said: “The deferral can be for up to six months, enabling the funds to ensure property values reflect market conditions.”

The funds affected are: Canlife Property Life Fund, Canlife Property Pension Fund, Canlife UK Property Life Fund and Canlife UK Property Pension Fund.

Standard Life Investments was the first investment manager to halt redemptions on Monday (4 July), when it suspended trading on its £2.9 billion fund. On Tuesday (5 July), Aviva Investors and M&G Investments stopped redemptions on their £1.8 billion and £4.4 billion offerings respectively.

Henderson said: “The suspension has been implemented to safeguard the interests of all investors. Uncertainty generated by the European Union referendum has had a negative effect on market sentiment and led to substantial withdrawals from property funds. A cash liquidity buffer is typically held to meet redemptions but the pace and size of redemptions has increased to abnormally high levels following the referendum result. This has put exceptional liquidity pressures on the fund, exacerbated in recent days by the suspension of other direct property funds.”

The firm added: “We will announce a date for the re-opening of the fund and feeder when we are comfortable that we have sufficient cash to meet client redemption intentions plus a sufficient liquidity buffer to meet any fresh redemptions.”