Aberdeen lifts property fund suspension

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Aberdeen Asset Management has lifted the suspension on its £2.7 billion UK property fund, the company said in a statement today.

The fund manager was one of six funds that froze withdrawals last week after uncertainties about UK property prices saw investors rush to withdraw their cash. In total, around £18 billion of client money was affected.

Those wishing to withdraw money will have to accept a 17 per cent cut in the value of their investment. Aberdeen said it was necessary to apply the “fair value adjustment” to protect the money of long-term investors.

The company said it realised the measures would have “inconvenienced some investors,” but said they were solely imposed to stop further withdrawals and were not reflective of a genuine fall in the value of UK property.

A run on the fund could have forced the sale of property in order to honour the redemption requests of investors.

“Short-term sales in the property market have relatively penal consequences,” the firm said.

The “measures we have put in place have been imposed solely to reflect the need to dispose of properties in order to provide liquidity.”

Aberdeen said it expects to remove the full value of the fund once market conditions had returned to normal.

However Martin Gilbert, Aberdeen chief executive, said: “The market may take time to find its level. Investors should be aware that the price may be adjusted on a daily basis to reflect the funds' requirement to provide liquidity and the need to protect all investors.”

Commercial property funds managed by M&G, Aviva, Standard Life, Henderson, Canada Life and Threadneedle were all suspended last week amid widespread fears that Brexit may cause businesses to leave the UK, threatening property values. All remain frozen to withdrawals.

FCA chief Andrew Bailey last week called for “liquidity mismatches” in such property funds, which are mostly aimed at retail investors, to be addressed.

Investors can withdraw money on a daily basis whereas the property in which their money is invested can take months or even years to sell.