Aberdeen Standard Investments  

ASI to reopen property funds next month

ASI to reopen property funds next month

Aberdeen Standard Investments is to reopen its property funds next month following “careful consideration”.

The fund house announced today (October 19) it intends to lift the temporary dealing suspensions on its £1.6bn Standard Life Investments UK Real Estate fund and the £900m Aberdeen UK Property fund from November 16.

The funds were suspended in March following advice from independent valuers that it was not possible to provide accurate and reliable valuations for all properties held in the funds.

It mirrored the rest of the market. All the ‘bricks and mortar’ UK property funds available to retail investors — with about £13bn of assets between them — were suspended in the third week of March at the start of the coronavirus crisis.

But from early September, asset managers have been allowed to reopen their property funds if they saw fit following the Royal Institution of Chartered Surveyors' recommendation for a general ‘lifting’ of material valuation uncertainty from areas of UK real estate.

ASI said today that the removal of the suspension followed “careful consideration of a number of factors”.

Such factors included the current and forecast liquidity levels of the funds together with the expected fund flows and market liquidity.

George Shaw, manager of the Standard Life Investments UK Real Estate fund and the Aberdeen UK Property fund, said: “We are delighted to announce our plans to resume dealing in the two funds from 16 November. 

“We recognise that the dealing suspension will have been inconvenient to investors, however, the decision was made to ensure the fair treatment of all clients and customers. 

“Despite the market disruption due to the Covid-19 pandemic we still consider UK commercial property has a role to play in a diversified portfolio for the longer term investor.”

Slow wave of reopening

St James’s Place had opened its fund on the first day (September 9), while Columbia Threadneedle’s equivalent portfolio was reopened a week later.

The LGIM UK Property fund became open for business last week (October 13) while the suspension has been lifted on Royal London's fund since the end of September.

Meanwhile, Aviva is monitoring the market while Aegon, Janus Henderson, BMO and M&G Investments are keeping their funds suspended to allow for the raising of additional liquidity.

How it works

Rules announced by the Financial Conduct Authority last year require property funds to automatically suspend when their valuers find material uncertainty over the pricing of 20 per cent or more of their assets.

Portfolios were gated because the coronavirus crisis had caused material uncertainty in the market.

Meanwhile, the FCA is consulting on rules which would require investors to give notice — potentially up to 180 days — before their investment is redeemed from an open-ended property fund.

It is an attempt to curb the “liquidity mismatch” between the underlying property held in such funds and the daily basis on which investors buy and sell units.