UK - Brandeaux has reopened its student accommodation fund this week by issuing a new share class and amending redemptions rules.
The Brandeaux Student Accommodation Fund, which suspended dealings last December, will launch the new share class on 12 March 2009 to help manage liquidity levels in the fund, and alter redemption term so investors can only exit the fund six months after completing a redemption request form.
Kay Brandeaux, chairman of the firm, said: "The directors have decided that the most appropriate course of action to protect shareholder value is to reopen the fund with a new share class. The new share class has redemption terms designed to offer the flexibility to meet normal redemptions within reasonable time, whilst giving protection against a run on the Fund's liquidity."
Brandeaux hopes that by offering new shares it will be able to satisfy investors' demands to invest in the fund and expand the fund's property portfolio, which now has properties in 18 major university towns and cities across the UK.
The fund, set up in 2000, was valued at £676m (€760m) on 30 November 2008, and delivered returns of 10.71% in 2008.
The suspension of redemptions for existing shares remains in place, but shareholders will be given the chance to convert their shareholdings into the new share class.
Once existing shareholders have converted 75% of existing shares into new ones, the fund then has the power to convert the remaining existing shares.
The new share class will cost the same as existing shares, which at the end of January were worth £2.21 (€2.48).
The directors will maintain the right to advance or postpone a redemption and to accept or refuse a redemption request at any time and under any circumstances.
The firm also plans to introduce new share classes for its dual Brandeaux sterling, euro and US dollar funds.
Brandeaux said the directors considered various strategies for raising liquidity in the fund including selling assets, borrowing liquidity, lifting the suspension on existing shares and liquidating the fund.
Brandeaux expects the fund to continue achieving 100% occupancy as a result of a 7.8% increase in university applications this year, increasing student demand for accommodation and the current shortage.
The firm has negotiated room rental rates for 2009/2010 with universities at an overall increase of more than 6% year-on-year.
Brandeaux manages specialist collective investment funds for institutional and professional investors and had around £2bn of assets under management across seven funds in December 2008.
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