Henderson, Columbia Threadneedle and Canada Life add to UK property fund withdrawals total

Henderson Global Investors, Columbia Threadneedle and Canada Life have become the latest asset management groups to suspend trading on their UK property funds.

So far this week, six groups have suspended trading leading to over half of the the £25bn in the UK Investment Association’s property sector being frozen, with investors money trapped in the funds until further notice.

Hendersons announced earlier today that flows from its £3.9bn property fund would be temporarily frozen in the wake of Brexit. This was followed by similar announcements by Columbia Threadneedle and Canada Life this evening.

Standard Life Investments was the first to make the move to suspend trading and restrict withdrawals from its UK Property fund on 4 July, followed by similar moves by Aviva Investors and then M&G just over 24 hours later.

Henderson followed today by suspending all trading on its UK Property PAIF and the feeder fund due to “exceptional circumstances”, the asset manager said in a note to investors.

The move was effective from 12 noon on 5 July and the suspension will be formally reviewed at least every 28 days.

Uncertainty

Uncertainty generated by the UK decision to leave the EU has had a negative effect on market sentiment and led to substantial withdrawal 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,” the note said.

“This has put exceptional liquidity pressure on the fund, exacerbated in recent days by the suspension of other direct property funds.”

Canada Life 

In a statement released this afternoon, Canada Life said that due to the ongoing uncertainty around the pricing of commercial property assets, following the vote to leave the European Union, and the recent rise in requests to withdraw (or switch) from the property funds, “we have taken the decision to immediately defer requests for withdrawals from our property funds, as of 3pm on the 5th July”.

Deferring requests to withdraw allows Canada Life to “protect the interests of all investors in the property fund”, including those who plan to remain invested for the medium to long term. The deferral can be for up to six months, enabling the funds to ensure property values reflect market conditions.

As a result of this change clients will not be able to cash in or switch units out of the Canada Life Property Pension fund; Canada Life Property Life fund; Canada Life Property Pension fund; Canada Life Property Life fund; Canada Life UK Property Life fund and Canada Life UK Property Pension fund on the date they submit a request.

The funds are in the region of £500 million in value.

Columbia Threadneedle

Columbia Threadneedle also said today its £1.4bn UK Property fund and feeder fund will follow suit as they have “not been immune” to the recent trend of retail outflows from the sector although, the company said that these requests have been met from the cash balance retained within the Threadneedle PAIF so far.

“However, it is expected that these requests to sell will continue for the timebeing due to uncertainty in the market following the UK referendum result, therefore the temporary suspension of dealings allows sufficient time for the orderly sale of assets, and protects the interests of all investors,” it said in a statement.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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