PropertyAug 10 2016

Aviva warns property fund gating will last until 2017

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Aviva warns property fund gating will last until 2017
ByTaha Lokhandwala

Aviva Investors has warned investors in its £1.8bn Property Trust that the portfolio is likely to remain suspended for at least another five to seven months.

The firm suspended its open-ended UK bricks and mortar property fund on July 5 for an initial 28-day period, before extending the gating for a further month on August 2.

In an update to investors, seen by Investment Adviser, the fund house warned the suspension could last until March 2017.

“In order to lift the suspension we need to ensure that we can meet any requests to sell, buy, switch or transfer units which have been held by us during the suspension period,” the company said in the letter.

“The suspension is therefore likely to be in place for a period of at least six to eight months from the date of suspension. We will continue to monitor liquidity on a daily basis and are in regular contact with the trustee and depositary.”

“Property sales may be more difficult to execute in the current environment due to market uncertainty. In disposing of properties, we need to ensure we act in the best interests of all investors.”

Aviva Investors was the second firm to suspend trading on its property fund in the aftermath of the UK’s decision to leave the EU, following on from Standard Life Investments. An additional four retail funds remain suspended.

Aberdeen and L&G, two firms which added penal price moves for redeeming investors rather than suspending trading on their portfolios, have since reduced these downwards adjustments - a sign that trading conditions in the commercial property market may be starting to normalise.