Aberdeen lifts trading ban on UK property fund
Aberdeen Asset Management has lifted a temporary suspension on its open-ended UK property fund, allowing investors to trade shares for the first time in a week.
The company is one of a number of managers that have been forced to suspend trading in their property funds following redemption requests from predominantly retail investors.
Aberdeen has effectively applied a 17% charge to any redemptions, to discourage investors from leaving and to protect remaining investors at a time when commercial real estate pricing is uncertain.
The temporary suspension (other managers have applied 28-day suspensions) was designed to give those investors that had requested redemptions to reconsider in view of what Aberdeen calls “anti-dilutive measures”. Aberdeen’s suspension was extended from an original 24-hour duration to a week.
Aberdeen sought to make it clear that the 17% charge is distinct from the 7% fair value adjustment it has made on its properties – the latter implies the value of its assets have dropped by 7%.
“It is important to note that the anti-dilutive 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.
The company said the diluted price is “not a reflection of what we believe is currently achievable in the absence of undue pressure to sell properties”.
It added: “Accordingly, if future trading in the fund reverts to lower levels, we would expect to lower or remove the dilution adjustment, and the price would then revert to a level reflective of longer-term property values.”
Martin Gilbert, CEO of Aberdeen, said 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”.
He added: “The market may take time to find its level but I have no doubt that property will continue to play an important part in investors’ portfolios.”
It is understood that the pressure on property fund managers to suspend trading is down to retail investors seeking to redeem capital following the EU referendum result.
Some funds are retail-only, although some – including the Aberdeen UK Property Fund – have a mixture of retail and institutional investors.
IPE Real Estate understands that some institutional funds have been experiencing an increase in redemptions following June 24.