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Standard Life Investments to reopen UK property fund as market 'stabilises'

Published 26/09/2016

The company will lift the suspension at midday on Monday October 17 (Standard Life/PA)
The company will lift the suspension at midday on Monday October 17 (Standard Life/PA)

Standard Life Investments has announced it will reopen its UK property fund within weeks, saying that Britain's commercial real estate market has "stabilised" in the wake of the EU referendum.

Standard Life UK Real Estate was the first firm to suspend trading in its UK property fund this summer, amid fears that Brexit-spooked investors would scramble to ditch their holdings and prompt a further surge in redemptions.

The firm said it will lift the suspension at midday on Monday October 17 - more than three months after investors were barred from buying or selling shares in the £2.7 billion UK Real Estate Fund on July 4.

"We now believe the commercial real estate market has stabilised and that the adequate level of liquidity achieved will allow the suspension to be lifted," Standard Life explained.

The fund will reopen to trade just days after Henderson UK Property Trust lifts a suspension on its own Property Authorised Investment Fund (PAIF) on October 14. Meanwhile, Threadneedle UK Property Trust's PAIF reopened for trade at midday on Monday.

David Paine, head of real estate at Standard Life investments, said: "In the immediate aftermath of the EU referendum result, redemptions from retail investor property funds increased dramatically whilst property transactions reduced significantly.

"During the period of suspension the fund has been able to restore liquidity through an orderly disposal of assets. We are pleased with the progress made and the removal of the market value adjustment, and able to announce the reopening of the fund next month."

Laith Khalaf, a senior analyst at Hargreaves Lansdown, noted that there are "still some big funds" that are yet to resume trading, including Aviva's own property fund.

But while the UK property fund sector is "returning to some semblance of normality", troubles could still lie ahead, he said.

"The big freeze that beset property funds over the summer could well recur if the sector sees more large withdrawals, so investors should make sure they are willing to accept this ongoing risk, and to hold the funds for the long term."

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