The HC Mansion Student Accommodation Income and Growth fund has been forced to suspend redemptions, becoming the latest fund to do so in a sector troubled by liquidity issues.
The £45m UK-domiciled and regulated collective investment scheme shares its name and property management company with the £282m Guernsey-based Mansion Student Accommodation unregulated collective investment scheme, which also suspended redemptions last October, but authorised corporate director Host Capital stated that there was no connection between the two.
Speaking to FTAdviser Christopher Finch, manager of the fund at Host Capital, said the redemptions were down to the fact that some IFAs had clients in both funds and in looking to generate liquidity had redeemed from the liquid Income and Growth fund.
Mr Finch said: “Its down to the fact that we’re a young fund - only 18 months old - and we’ve experienced recently some redemptions from a very narrow band of our IFA supporters which has reduced our liquidity.
“As a regulated manager we took the prudent step to manage the fund liquidity appropriately and differed redemptions. It will be a few months before we put a liquidity facility into the fund and resume normal trading.”
At the start of this year Brandeaux wound up its range of student property investments which were been suspended for more than six months.
The Brandeaux Ground Rent, Brandeaux Student Accommodation and Brandeaux Dual Assets funds were hit by liquidity concerns last summer, with the firm blaming the Financial Services Authority’s move in 2011 to ban the sale and marketing of unregulated collective investment schemes to retail investors.
This month Liberty Living announced its intention to buy up Brandeaux’s student accommodation funds and float on London Stock Exchange.
Mr Finch agreed that the sector’s troubles must be down to the squeeze on unregulated offshore funds.
He said: “When you look at the underlying asset class it couldn’t be performing any better if it tried, there were materially different reasons why clients were redeeming back in 2008/09, the asset classes were under a great deal of pressure with the credit squeeze, but today its performing very well, so the only event I can see which has triggered redemptions in the offshore market is to do with the regulation and promotion in the UK.”
The Income and Growth fund has had a total return of 7.13 per cent since launch, with fully let property assets and another new property acquisition planned.
