L&G takes further fund action as property stabilises

L&G takes further fund action as property stabilises

Legal & General Investment Management (LGIM) has further reduced the negative “fair value adjustment” on its UK Property fund to 7.5 per cent, claiming market conditions have begun to stabilise.

A 5 per cent adjustment was initially placed on the £2.3bn vehicle in the aftermath of the EU referendum result, with this being upped to 15 per cent on July 7 before being moved back down to 10 per cent last week

The asset manager cited improving conditions for the change, made today (July 27).

Article continues after advert

“While it remains difficult to predict the exact impact of the vote to leave on commercial property values, conditions in the market and within our peer group have begun to stabilise,” the company said.

LGIM had previously reinstated the fund’s bid/offer spread of around 5.7 per cent at the start of this week.

The firm had reducing this spread to zero in early July, in a bid to encourage inflows at a time when the fair value adjustment stood at 15 per cent and several firms were suspending their portfolios.

The company said of the bid/offer decision, announced on July 22: “The fund is now nearing its pre-referendum liquidity levels. This places the fund in a strong enough position to consider purchasing new assets, should the appropriate opportunities arise in what continues to be an interesting market.”