Business

Aberdeen lifts property fund suspension

An apartment building in Stratford, east London, owned by Aberdeen's commercial property fund Image copyright John Wildgoose
Image caption An apartment building in Stratford, east London, owned by Aberdeen's commercial property fund

Aberdeen Asset Management has lifted the suspension of its multi-billion UK commercial property fund.

The company was one of several fund managers to suspend redemptions from property funds worth £18bn in the wake of the UK's Brexit vote last month.

The value of Aberdeen's fund was cut by 17%, leaving it worth about £2.7bn.

Most investors who wanted their money back had now asked for their redemption orders to be cancelled, a spokesman said.

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."

The firm will sell some property assets to meet redemption requests.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Investors should be very wary of dealing under these conditions. Those selling the fund are probably already expecting the worst, so it's buyers who stand to be most disappointed if the price suddenly jumps up."

Ten commercial property funds run by the likes of M&G, Aviva, Standard Life, Henderson, Canada Life and Threadneedle that were mostly aimed at retail investors have all imposed restrictions on redemptions following market turbulence after the referendum vote.

Lending cut

Last week, Legal & General cut the value of its £2.3bn ($3bn) UK property fund by a further 10%, following a previous 5% reduction.

Five funds - Aviva, Henderson, M&G, Standard Life and Threadneedle - remain suspended.

Meanwhile, a Bank of England report found that banks reduced lending to the commercial property sector for the first time in four years ahead of the EU referendum amid fears over a collapse in prices.

Image copyright Getty Images

The Bank's credit conditions survey revealed that the availability of loans for the sector fell sharply in the second quarter of this year - the first fall since the same period in 2012.

Banks are expected to place further restrictions on lending to the sector, according to the report.

Mark Carney, governor of the Bank of England, has warned about the outlook for the commercial property sector because prices were expected to be hit by the Brexit decision.

Some analysts fear price falls of up to 20% - some distance from the falls of about 44% recorded during the financial crisis.

It emerged on Tuesday that the Bank was given advance warning by the Financial Conduct Authority about the likelihood of property fund suspensions.

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