Standard Life Investments suspends trading of UK real estate fund after Brexit
05 Jul 2016
In another example of the negative economic impact of the UK's unexpected vote to leave the EU, Standard Life Investments said yesterday it was suspending trading of its UK real estate fund. The company cited ''exceptional market circumstances'' following the 23 June referendum, and the increasing number of people seeking to withdraw their money from the market after the vote.
The £2.9-billion ($3.84 billion) UK real estate fund with investments in commercial properties - including offices, warehouses and shopping centres suspended trading at midday yesterday. It added that the suspension would be reviewed at least once every 28 days, and would continue to be in effect till such time as the company deemed practical, it said.
''The suspension was requested to protect the interests of all investors in the fund and to avoid compromising investment returns from the range, mix and quality of assets within the portfolio.… The selling process for real estate can be lengthy as the fund manager needs to offer assets for sale, find prospective buyers, secure the best price and complete the legal transaction. Unless this selling process is controlled, there is a risk that the fund manager will not achieve the best deal for investors in the fund, including those who intend to remain invested over the medium to long term,'' the statement from the company said.
"The suspension was requested to protect the interests of all investors in the fund," it said in the statement.
The move comes after Standard Life Investments, the insurer's fund management arm, wrote down the value of the fund by 5 per cent last week.
Most investment funds keep some amount of ready cash for the odd investor who wanted their money back.
When many people want their money back at the same time, the funds need to sell stuff to raise enough cash and selling office blocks under such circumstances is a major problem.
