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UK property funds facing curbs on withdrawals reach $17.8 billion

Carolyn Cohn
Updated ·2-min read
New residential homes are seen at a housing estate in Aylesbury

By Carolyn Cohn

LONDON (Reuters) -Asset manager CBRE Investment Management has delayed withdrawal requests from some UK property fund investors due to "ongoing market conditions", a spokesperson said, bringing the total facing curbs in such funds to 15 billion pounds ($17.8 billion).

Open-ended real estate funds in Britain have been battling to meet a surge in demand for redemptions against a backdrop of high inflation and economic uncertainty, as valuations come under pressure from rising interest rates.

Several funds restricted withdrawals last year to prevent a stampede for the exits. But the situation has worsened since pension schemes sold property assets to find cash during a liquidity crisis in late September.

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"Across the (pensions) industry we’ve seen a wholesale wave of disinvestment from property and other illiquid assets, often at quite significant discounts to net asset value," said Simeon Willis, chief investment officer at pensions consultants XPS.

Investors who put in requests to withdraw money from the 1.7 billion pound CBRE Property Authorised Investment Fund in the third quarter will receive "around half" of their redemption payments in January, with the remainder to follow "as soon as practically possible", the spokesperson said by email.

CBRE said in October it was deferring second-quarter redemption requests. The fund will pay out all those redemption requests "in the coming weeks", the spokesperson said, adding that CBRE was seeking to preserve liquidity in "a very challenging environment".

U.S. fund manager BlackRock and British asset manager M&G are delaying redemptions from UK property funds managing around 8.1 billion pounds of assets, Reuters reported on Wednesday.

In October, investment manager Columbia Threadneedle suspended dealing in its CT UK Property Authorised Investment Fund, aimed at retail investors. The fund, which was worth 364 million pounds at the end of December, remains suspended, a spokesperson said on Thursday.

It also switched its 2.1 billion pound Threadneedle Pensions Pooled Property Fund to monthly from daily withdrawals in October. That change remains in place, the spokesperson added.

Schroders, which in October said it was delaying second-quarter payments on its 2.7 billion pound Schroders Capital UK Real Estate Fund, made those payments on Jan. 3, a spokesperson said by email.

The firm was still "in active dialogue" with its clients on third-quarter redemption requests, the spokesperson added.

($1 = 0.8439 pounds)

(Reporting by Carolyn Cohn; Editing by Elizabeth Howcroft, Elaine Hardcastle and Jan Harvey)