UK - Fund manager Ignis' failed attempt to take over F&C's Commercial Property Trust (FCPT) this week is unlikely to halt consolidation in the UK market. The proposed merger, engineered by Ignis major shareholders Phoenix and Friends Provident, fell through after minority shareholders narrowly voted against. FCPT fund manager Richard Kirby's position is technically still under discussion, although he is likely to stay on. Opposing minority shareholders emerged with just under 51% of the vote - enough to scupper the deal but far short of an overwhelming rejection. F&C had argued that the merger, which would have created a £1.6bn (€1.9bn) property company, impaired investor choice. However, the failure is unlikely to halt a consolidation trend forecast by Partners Group co-head of property Claude Angeloz to halve European property funds. Indeed, two F&C UK property funds - the £126.3m Isis Property Trust and the £167.5m IRP - are ripe for consolidation, according to Numis Securities analyst Charles Cade. Both vehicles, each comprising a 60/40 equity/debt ratio, are managed by Ian McBryde, who was today unavailable for comment. Cade acknowledged that the merger, had it taken place, would have benefited Ignis more than F&C. However, as it turned out the vote effectively backed choice over liquidity. "Consolidation means larger funds and larger funds mean more liquidity," he said. "It would reduce choice but the mandates are similar, even if there are small differences between the portfolios." He added: "Mergers are very difficult to achieve. There are potential merger candidates at F&C but they have different boards so it isn't straightforward. If the manager had underperformed, it would be different, but there is no clear candidate here for that to happen." One impact of the merger threat has been to extract a promise from F&C to reduce its management fees. F&C has promised to reduce the annual management fee on IRP from 0.85% to 0.70%. "Certainly there is a precedent that people will be looking at the peer group when they're setting fees," says Cade. "It's potentially a good thing, though for smaller funds there is less economic reason for them to cut fees."