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Standard Life Investments suspends trading in £2.7bn UK property fund

Published 04/07/2016

Standard Life said it has seen a surge in redemption requests linked to
Standard Life said it has seen a surge in redemption requests linked to "uncertainty for the UK commercial real estate market"

Standard Life Investments has suspended trading in its £2.7 billion UK Real Estate fund as investors spooked by the Brexit vote scramble to ditch their commercial property holdings.

The company said it has seen a surge in redemption requests linked to "uncertainty for the UK commercial real estate market following the EU referendum result".

Standard Life said: "The suspension was requested to protect the interests of all investors in the fund and to avoid compromising investment returns from the range, mix and quality of assets within the portfolio.

"Unlike investing in equities, the selling process for real estate can be lengthy as the fund manager needs to offer assets for sale, find prospective buyers, secure the best price and complete the legal transaction.

"Unless this selling process is controlled, there is a risk that the fund manager will not achieve the best deal for investors in the fund."

Investors are now restricted from buying or selling shares in the fund for a minimum period of 28 days, after which there will be a review.

Experts are forecasting that large financial institutions based in London will relocate unless certain guarantees, such as passporting rights, are secured as part of Brexit negotiations. An exodus would drive down the value of commercial property in the capital.

Overseas investors could also desert London. Last week, Singaporean United Overseas Bank said it will halt lending on property purchases in the capital as uncertainty grips Britain's political and economic landscape.

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