Brexit fallout sees Standard Life suspend trading in UK property fund

The fund manager said the number of investors asking to withdraw their money had increased following the vote.

The move follows last week’s decision to write down the value of the fund by 5 per cent as a result of the Brexit vote which SLI said had “negatively impacted” valuations for UK commercial property.

Henderson Global Investors and Aberdeen Asset Management had previously reduced the value of their UK property funds by 4 per cent and 5 per cent respectively.

On announcing this week’s decision to cease trading on the £2.9bn UK property fund, which invests in a mixture of commercial real estate in the UK, including office blocks, shopping centres and warehouses, Edinburgh-based SLI said in a statement: “The suspension was requested to protect the interests of all investors in the fund.”

A spokesperson said: “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.”

They added: “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, including those who intend to remain invested over the medium to long-term.”

It is the first time that Standard Life has stopped investors taking their money out of the fund since the financial crisis of 2008.

SLI said the suspension would end “as soon as practicable” and it would review the decision every 28 days.

Several fund managers have also decided to price their property funds weekly, rather than monthly, to try to safeguard themselves against market volatility.

Data published earlier showed that investors sold off UK and property funds in favour of bonds in the run up to the EU referendum.

Private investors withdrew a net £342m from UK funds in May, compared to a £1.1bn investment in the same month last year, according to figures from fund manager trade body the Investment Association.

Last week Aberdeen imposed a 3.75 per cent fair value adjustment on the £3.4bn Aberdeen UK Property Paif and feeder fund, and Henderson added a 4 per cent adjustment to its £4bn UK Property fund.