Standard Life Investments has suspended all trading in one of its real estate funds following an increase in redemption requests since the U.K.’s decision to leave the European Union.
The firm said in a statement Monday that “due to exceptional market circumstances” it had decided to suspend all trading in the Standard Life Investments U.K. Real Estate Fund and its associated feeder funds. The suspension took effect midday Monday, and the statement added that “the suspension will end as soon as practicable, and will be formally reviewed at least every 28 days.”
Also, Aviva Investors said Tuesday that it had suspended dealing in its Aviva Investors Property Trust.
A statement provided by a spokesman for the firm said: “The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect. Suspension of dealing will give Aviva Investors greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings.”
A spokeswoman for Standard Life Investments confirmed in an e-mail that redemptions in that firm’s fund had been from a “broad mix from wholesale, retail and institutional” clients.
“The decision was taken following an increase in redemption requests as a result of uncertainty for the U.K. commercial real estate market following the EU referendum result,” the statement said. “The suspension was requested to protect the interests of all investors in the fund and to avoid compromising investment returns from the range, mix and quality of assets within the portfolio.”
The statement highlighted that the sales process for real estate assets “can be lengthy as the fund manager needs to offer assets for sale, find prospective buyers, secure the best price and complete the legal transaction. Unless this selling process is controlled, there is a risk that the fund manager will not achieve the best deal for investors in the fund, including those who intend to remain invested over the medium to long-term.”
The fund invests in a mix of prime commercial real estate assets across office, retail, industrial and other sectors. “Its lower risk positioning should be beneficial for performance in times of market stress and uncertainty. The fund continues to offer a stable and secure income return with a distribution yield” of about 3.86%, the statement said.