STANDARD Life has said it will reopen trading in the UK Real Estate Fund, which was suspended in the wake of the Brexit vote, in the belief that the commercial property market has stabilised.
The £2.9 billion fund was one of a number to halt trading on 4 July after the vote for the United Kingdom to leave the European Union prompted many investors to try to reduce their holdings.
The rush for the exits reflected fears that commercial property prices would plunge amid the slowdown expected in the economy following the shock outcome of the June referendum.
Edinburgh-based Standard Life said yesterday the decision to halt dealings temporarily was taken in order to protect the interests of all investors in the fund following an unprecedented level of redemptions
The company added: “We now believe the commercial real estate market has stabilised.”
David Paine, head of real estate at Standard Life’s investment arm said the market could be supported by investors’ efforts to generate returns on a world of low interest rates and nominal growth.
The company said it had implemented a controlled and structured asset disposal programme in order to raise sufficient liquidity to meet future redemptions. Work is ongoing to ensure the fund is well positioned for markets in the long-term.
Purchases and redemptions of shares in the fund and feeder funds will return to normal at 12 noon on 17 October.
Laith Khalaf, senior analyst at the Hargreaves Lansdown financial services group, said the announcement provided a sign that the UK property fund sector was returning to some semblance of normality.
Trading in a number of property funds has been restored following a period of suspension in the wake of the Brexit vote.
Aberdeen Asset Management suspended trading in its £3.2bn property fund for one week to allow reconsideration by investors who had placed orders the day before the change.
When trading resumed the company imposed a seven per cent ‘fair value adjustment’ to the price of the underlying portfolio at the time of the original suspension.
This has been reduced in stages, to 1.27 per cent of the latest independent month-end valuation from 16 September.
But Mr Khalaf added: “There are still some big funds out there that are yet to open their gates.”
He noted trading in the M&G Property Portfolio fund and the Aviva Investment Property Trust is suspended.
Returns on some property funds could be depressed as a result of the amount of cash they are holding to provide liquidity for shareholders.
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