Three more UK property funds halt trade

Blaming “exceptional liquidity pressures”, six managers of property funds have stopped withdrawals.

Five UK property funds have moved to halt withdrawals. Picture: Simon Dawson/Bloomberg.

Henderson Global Investors, Columbia Threadneedle and Canada Life have become the latest fund managers this week to stop investors in UK property funds from pulling their money out, after Britain voted to leave the European Union.

Henderson said Wednesday that it had temporarily suspended all trading in its GBP3.9 billion ($US5.1 billion) Henderson UK Property PAIF and its feeder fund “due to exceptional liquidity pressures.”

Columbia Threadneedle said it had also suspended dealing in its GBP1.4 billion Threadneedle UK PropertyAuthorised Investment Fund and its feeder fund.

Canada Life said in a note to investors seen by Reuters that it had also suspended its Canlife Property and Canlife UK property funds.

The moves come after Standard Life Investments, Aviva Investors and M&G Investments suspended trading on UK property funds earlier this week, after a sharp rise in redemptions that followed the EU referendum on June 23.

This means that half of the 10 largest UK property fund managers have now suspended trading temporarily.

The other five largest funds investing in UK commercial property are managed by Kames Capital, Aberdeen Asset Management, Legal & General Investment Management, F&C and Royal London Asset Management.

Aberdeen, LGIM and Royal London all confirmed their funds are still trading. A spokeswoman for Royal London pointed to the fund’s largely institutional client base and the fact that, unlike other funds in its class, it offers monthly liquidity.

Kames and F&C didn’t immediately respond to requests for comment.

Henderson said its decision Wednesday was aimed “to safeguard the interests of all investors.”

“The decision was taken due to exceptional liquidity pressures on the funds, as a result of uncertainty following the EU Referendum and the recent suspension of other direct property funds,” the company said.

Columbia Threadneedle said it wanted to ensure it can maintain a cash balance in the fund to meet requests from clients who wish to sell their shares.

“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.

“However, it is expected that these requests to sell will continue for the time being due to uncertainty in the market following the UK Referendum result.”

In response to the rash of suspensions, Britain’s Financial Ombudsman Service said it had begun to receive calls from concerned retail investors worried about the closures and the potential hit to their savings.

“It is certainly too early for formal complaints about this issue, however, we have begun to see initial enquiries come through from concerned consumers,” a spokeswoman said.

“This is something that is very much on our radar. Although the decision to suspend redemptions was expected, the extent of the suspensions by the three funds so far is quite troubling.”

Dow Jones, Reuters