Columbia Threadneedle to lift UK property fund suspension; launch new offshore fund

Columbia Threadneedle to lift UK property fund suspension; launch new offshore fund

Columbia Threadneedle Investments has announced its intention to lift the trading suspension on the Threadneedle UK Property and feeder fund, while also announcing plans for a new offshore SICAV version of its UK equity income strategy for international investors.

With regard to the Threadneedle UK Property and feeder fund, the fund’s depositary, Citibank Europe, UK Branch, and the Financial Conduct Authority have been informed of the decision to lift the suspension on 26 September, at the 12 noon valuation point, the company announced in a statement.

Trading in the fund was suspended on 6 July in order to protect existing investors in the wake of market instability following the UK’s decision to leave the EU, which led to significant outflows in retail property funds.

The fund will open without redemption penalties, and will return to standard monthly valuations. It will re-open on a bid basis, which was the same basis as prior to suspension, Columbia Threadneedle said.

Activity since Brexit

Following the UK’s Brexit decision at the end of June, the fund has completed, exchanged or agreed to sell 25 properties totalling £167m (€197m) across all UK regions and property types, with no forced sales during July, the firm said. The prices achieved are in aggregate less than 1% down from the last independent valuation prior to the referendum.

The yield on the fund is currently 6.6% against proven valuation as at 31 July. In the current climate of low growth and low returns from other asset classes, and with the UK property market yielding 5%, UK property offers “a significant in-built risk premium” for long-term investors,” Columbia Threadneedle said.

‘Unprecedented levels’

“In the short period following the referendum we saw animal spirits drive unprecedented levels of redemptions from daily dealt open-ended property funds,” said Don Jordison, managing director of Property at Columbia Threadneedle Investments.

“Much of the earlier commentary now appears slightly irrational and more informed reflection has settled the market. Any effects of the Brexit vote on the overall UK economy – negative or otherwise – will take many months if not years to transpire and some time after that for the property market.”

New international fund launch

Elsewhere, Columbia Threadneedle Investments has said today that is also launching an offshore version of its UK Equity Income fund, it said in a statement.

The Threadneedle (Lux) UK Equity Income fund is an offshore version of its £3.4bn Threadneedle UK Equity Income fund managed by Richard Colwell.

Domiciled in Luxembourg, the Threadneedle (Lux) UK Equity Income fund will mirror the onshore Threadneedle UK Equity Income fund which typically holds between 45-60 positions in companies domiciled in the United Kingdom, with the aim to deliver a dividend yield at least in line or greater than the FTSE All Share TR Index (over 3 years rolling, gross of fees) and capital growth.

October roll out

The fund will be available to investors from beginning of October.

Gary Collins, head of wholesale, EMEA, at Columbia Threadneedle Investments said: “The fund is being launched in response to strong demand from overseas investors to access our UK equity income franchise which until now we have not been able to offer.

“A SICAV structure provides us with a vehicle to broaden our distribution and give investors access to an established and market-leading investment team.”