Strategy

Columbia Threadneedle To Lift Suspension On Property Fund

Amisha Mehta, Deputy Editor, 13 September 2016

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Investors in the UK retail property fund will be free to buy and sell shares as they wish.

Columbia Threadneedle Investments will resume trading in its Threadneedle UK Property Authorised Investment Fund and its feeder fund, Threadneedle UK Property Authorised Trust, on 26 September at the 12 noon valuation point.

The firm suspended trading in the fund on 6 July after experiencing “significant outflows” amid market volatility in the wake of the UK’s decision to leave the European Union. Other investment firms to freeze their property funds following the referendum included M&G Investments, Aviva Investors, Standard Life Investments and Aberdeen Asset Management. Aberdeen resumed trading in its UK property fund in mid-July following a week-long suspension.

“In the short period following the referendum we saw animal spirits drive unprecedented levels of redemptions from daily dealt open-ended property funds. Much of the earlier commentary now appears slightly irrational and more informed reflection has settled the market. Any effects of the Brexit vote on the overall UK economy – negative or otherwise – will take many months if not years to transpire and some time after that for the property market,” said Don Jordison, managing director of property at Columbia Threadneedle Investments.

“In the current climate of low growth and low returns from other asset classes, and with the UK property market yielding 5 per cent, it is our view that UK property offers a significant in-built risk premium for long-term investors. The yield on the Threadneedle PAIF is currently 6.6 per cent against proven valuation (as at 31 July 2016). We believe well diversified, high yielding property portfolios should be considered as part of a balanced portfolio for a long-term investor.”

Since July, the fund has completed, exchanged or agreed to sell 25 properties totalling £167 million across all UK regions and property types, with no forced sales. The prices achieved are in aggregate less than 1 per cent down from the last independent valuation before the referendum, the firm said. The fund will open without redemption penalties, and will return to standard monthly valuations. It will re-open on a bid basis, which was the same basis as before the suspension.

The fund invests in physical UK commercial property such as warehouses, shopping centres, high street shops and offices. In order to mitigate risk, it is highly diversified by sector, geography and volume of properties and tenancies, with minimal exposure to large central London properties where international demand is focused, particularly offices in the City of London.

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