Brexit Property-Fund Turmoil Eases as ‘Animal Spirits’ Settle

  • Threadneedle plans to reopen fund after two-month freeze
  • Asset managers reduce investor penalities as market calms

The turmoil that triggered the closure of seven U.K. real estate funds in the aftermath of Britain’s decision to leave the European Union is subsiding as companies reopen trading and investor penalties on redemptions ease.

Columbia Threadneedle Investments said Monday that it plans to reopen its U.K. Property Fund on Sept. 26 after a surge in withdrawal requests prompted the firm to halt trading in July. The firm said it had either sold or agreed to sell some 25 properties with prices just 1 percent lower than valuations before the referendum.

“We saw animal spirits drive unprecedented levels of redemptions,” Don Jordison, managing director of property at Columbia Threadneedle, said in a statement. “Much of the earlier commentary now appears slightly irrational and more informed reflection has settled the market.” 

The firm said it was able to unfreeze the fund without penalizing investors.

Aberdeen Asset Management Plc reopened its 3.2 billion-pound U.K. property fund in July after freezing redemptions for a week and cutting the value of its assets by about 20 percent. The London-based money manager has since reduced the discount to 3 percent. Canada Life started trading in its fund on Sept. 1, but has maintained a 7 percent penalty.

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Of the four remaining suspended funds at M&G Investments, Standard Life Investments, Aviva Investors and Henderson Group Plc, redemption penalties have been reduced. Legal & General Group Plc, which kept its fund open through the turmoil, removed its discount, while Kames Capital said in August that it had seen positive inflows into its real estate fund.

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