£3bn property fund suspends trading to prevent post-Brexit exits
A £3bn property fund with major interests in the West Midlands is preventing withdrawals in the wake of the EU referendum vote.
Standard Life Investments blamed “exceptional market circumstances” as it suspended all trading in its UK Real Estate Fund, which has more than 120 investment properties.
Leamington Shopping Park is the largest holding in the fund, valued at £110m, while £60m Birmingham office development 45 Church Street is also among its most significant properties.
It is the second negative move by the fund in a week, after it marked down the value of its buildings by 5% – reducing the value of its portfolio by £150m.
At the end of April, when the City was outwardly confident the UK would vote to remain in the European Union, the fund had liquidity of £500m. But Standard Life Investments has blamed Brexit uncertainty for an increase in redemption requests which has resulted in its decision to suspend trading.
It said: “Unlike investing in equities, the selling process for real estate 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.”
Standard Life said it will end the suspension “as soon as practicable” and will formally review the decision at least every 28 days.
The UK Real Estate Fund is the result of the recent merger of two property funds – the £1.6bn SLI Ignis UK Property Fund and the £1.4bn SLI UK Property fund – which together form a diversified portfolio of UK commercial property including retail, office and industrial.
