Scottish Equitable warns investors to wait for cash

Published on Friday 18 January 2008 09:41

SCOTTISH Equitable today warned retail investors in its £2 billion property fund that they may have to wait up to a year to get at their cash after restrictions were put on some withdrawals.

Property funds have seen a wave of defecting small investors as the sector endures its worst downturn in 15 years.

Scottish Equitable, which is headed by chief executive Otto Thoresen, is the second large property fund to impose restrictions, while other fund managers have also tightened up on pull-outs.

Just before Christmas, Friends Provident told its 118,000 retail property investors that they may have to wait up to six months to exit its 1.2bn portfolio because it could not sell assets fast enough to meet demand for redemptions.

Scottish Equitable, which is owned by Dutch insurance group Aegon, took the decision as the fall-out from the credit squeeze sparked by the US sub-prime mortgage crisis spreads worries throughout the wider property sector and impacts demand for commercial property. "Aegon UK has decided to take this step to protect investors following a significant level of customer withdrawals from the UK property fund market," the group said.

"This move enables Aegon to manage the funds in the interests of both long term investors and those who wish to exit the funds. It follows moves by other property funds to impose penalties."

Scottish Equitable's property funds now have just five per cent in liquid assets following a run of investor money.