UK Property Funds Impose Liquidity Limits - Reports

According to the FT, Schroders, Columbia Threadneedle and BlackRock have all had to restrict withdrawals from their funds as liquidity tightens across property funds once again.

Columbia Threadneedle has shifted from daily to monthly redemptions across its £2.3bn Threadneedle Pensions Pooled Property fund, citing "liquidity constraints resulting from the recent market volatility and a subsequent increase in redemption requests".

A spokesperson for Columbia Threadneedle said: "We have introduced deferred redemptions on the TPEN Property fund due to liquidity constraints resulting from the recent market volatility and a subsequent increase in redemption requests. We believe introducing this procedure is in the best interest of investors in the fund, allowing for an orderly sale of assets to meet redemption requests.

"We aim to return the fund to daily dealing as soon as possible and notify policyholders as and when this will be the case."

deVere Group pulls all UK property investment projects

BlackRock's UK Property fund has imposed unknown additional redemption restrictions on its £3.5bn AUM, after receiving significant withdrawal requests in Q2.

Schroders Capital UK Real Estate also saw increased withdrawals in Q2, with £65.3m of its £2.7bn AUM requested in Q2 and originally due on 3 October.

However, the fund manager has said it would return £7.8m of the request for now, with the remaining balance deferred until "on or before" 3 July 2022, utilising a clause that allows it to postpone redemption requests up to 24 months.

"It is expected that the deferred redemptions will be paid following successful completion of future asset disposals," Schroders said.

A spokesperson for the firm added: "We can confirm that the Schroders Capital UK Real Estate Fund (SCREF) has made the decision to partially defer redemptions relating to the 3 October 2022 dealing day.

"The decision will help to ensure sufficient liquidity is maintained in order to progress important asset management initiatives in line with performance enhancing business plans."

L&G UK Property reduces spread due to 'low likelihood' of property purchases

This marks the third occasion in five years that funds have struggled to return investor cash, with 2016 and 2020 each seeing widespread suspensions across the open-ended property market, although for now, all funds remain open.

Michael White, head of UK property at Canada Life Asset Management, said that while the commercial investment market had been suffering from a "summer period of inactivity", the value correction would give rise to a buying opportunity.

"With finance rates and the cost of debt rising rapidly the commercial investment market is having an extended summer period of inactivity," he explained. "Transaction volumes have dropped off a cliff, and there was little market evidence for valuers to move valuation yields with any certainty in September.

"We have found that occupational markets have remained relatively robust with continued take up of space, mostly notably for prime accommodation, across most of the main commercial and alternative sectors. 

"The success of the current fiscal plan to reduce inflation and boost GDP will clearly determine how far commercial capital values will fall."

BlackRock has been approached for comment.

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