Fresh blow for commercial property fund sector

Two more investment firms have put their commercial property funds into lockdown after seeing investors rush to pull out their money following the Brexit vote.

Five UK commercial property funds have now suspended trading. Picture: Jane Barlow
Five UK commercial property funds have now suspended trading. Picture: Jane Barlow

Henderson Global Investors and Canada Life became the latest groups to make the move, joining M&G Investments, Aviva and Standard Life Investments, which have all suspended trading in their UK commercial property funds. The five funds are worth more than £13 billion and their suspension has fuelled investor jitters over Brexit.

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Henderson said it halted dealing in its £3.9bn Henderson UK Property PAIF & Henderson UK Property PAIF Feeder Fund due to “exceptional” pressures on liquidity – meaning it did not have cash to repay investors, as funds are tied up in commercial properties. Investors are now restricted from buying or selling shares in the funds.

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It said: “The portfolio remains well positioned in core properties with high quality tenants, with the managers continuing to focus on delivering an attractive income stream.”

Canada Life said it suspended dealing in its £222 million property fund to “protect the interests of all investors in the property funds”.

It added in an alert to financial advisers: “We did not take this decision lightly as we understand how this may affect you and your clients. We will endeavour to lift the deferral as soon as practically possible.”

The Investment Association has sought to allay concerns, saying earlier this week that the ability to suspend trading “prevents fund managers from being forced to sell, in this case property interests, too rapidly and helps them achieve a better outcome for all their clients”.