UK property funds facing curbs on withdrawals hit US$17.8b

ASSET manager CBRE Investment Management has delayed withdrawal requests from some UK property fund investors due to “ongoing market conditions”, a spokesperson said, bringing the total amount facing curbs in such funds to £15 billion (S$24 billion).

Open-ended real estate funds in Britain have been battling to meet a surge in demand for redemptions against a backdrop of high inflation and economic uncertainty, as valuations come under pressure from rising interest rates.

Several funds restricted withdrawals last year to prevent a stampede for the exits. But the situation has worsened since pension schemes sold property assets to find cash during a liquidity crisis in late September.

“Across the (pensions) industry, we’ve seen a wholesale wave of disinvestment from property and other illiquid assets, often at quite significant discounts to net asset value,” said Simeon Willis, chief investment officer at pensions consultants XPS.

Investors who requested to withdraw money from the £1.7 billion CBRE Property Authorised Investment Fund in the third quarter will receive “around half” of their redemption payments in January, with the remainder to follow “as soon as practically possible”, the spokesperson said. CBRE said in October that it was deferring second-quarter redemption requests. The fund will pay out all those redemption requests “in the coming weeks”, the spokesperson said, adding that CBRE was seeking to preserve liquidity in “a very challenging environment”.

US fund manager BlackRock and British asset manager M&G are delaying redemptions from UK property funds managing around £8.1 billion of assets, Reuters reported on Wednesday (Jan 4).

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In October, investment manager Columbia Threadneedle suspended dealing in its CT UK Property Authorised Investment Fund, aimed at retail investors. The fund, which was worth £364 million at the end of December, remains suspended, a spokesperson said on Thursday.

Columbia Threadneedle also switched its £2.1 billion Threadneedle Pensions Pooled Property Fund from daily to monthly withdrawals in October. That change remains in place, the spokesperson added.

Schroders, which in October said it was delaying second-quarter payments on its £2.7 billion Schroders Capital UK Real Estate Fund, made those payments on Jan 3, a spokesperson said.

The firm was still “in active dialogue” with its clients on third-quarter redemption requests, the spokesperson added. REUTERS