Trading in the fund was suspended on 6 July 2016 as the managers received a large number of requests from investors to sell their investment. Property funds hold a cash buffer to satisfy sales, which is usually sufficient to ensure the managers are not forced to sell properties. However, the increase in requests after the EU referendum was such that the cash buffer was reduced to a level the managers were not happy with.
Threadneedle therefore temporarily stopped investors selling (or buying) units in the fund to afford the managers time to find suitable buyers for some of their properties. If forced to sell quickly they could be required to accept less than fair value to the detriment of remaining investors.
Since July, the managers have completed, exchanged or agreed to sell 25 properties totalling £167m. Cash is now at a level the managers feel is sufficient to meet normal redemption requests. While the managers hope to keep the fund open, any significant increase in requests from investors to sell their holding could cause the fund to re-close.
Instructions to buy or sell units in the fund can be placed online or via the phone. If you wish to place a deal online in time for the first valuation point your instruction needs to be received before 8am on Monday 26 September. Any regular savings contributions accumulated since the fund closed will not automatically be invested. To invest any accumulated regular savings contributions or to restart regular savings into this fund, please log into your account and place an instruction online.
Don Jordison and Gerry Frewin, the fund’s managers, feel the reaction to the UK’s decision to leave the European Union was irrational. On reflection, investors have realised any effect of the Brexit vote on the UK’s property market will take years to transpire. The current UK property market yield of 5% is attractive against a background of low interest rates and bond yields, and is an attractive alternative to equities, in the managers’ view.
Our latest views on the property sector are available here.