UK property funds limit withdrawals as pension funds shift assets
Three UK asset managers have said they are unable to handle heavy demand from investors seeking to withdraw from property funds, in another sign of how an accelerating decline in government bond prices is forcing pension funds to reallocate holdings.
Schroders said it will make some redemptions originally due on Monday as late as July next year, while Columbia Threadneedle said volatile market conditions had forced it to switch from daily to monthly payouts. At the same time, BlackRock also imposed new restrictions on withdrawals.
This once again highlights how funds based on hard-to-sell assets struggle when the volatility that has stalked stocks and bond markets all year pushes investors to demand cash back in a hurry.
These forces have intensified at a point when conditions in private markets including equity, real estate and credit, are already fraught. A sharp deterioration in lending conditions has made it difficult to get deals done in unlisted assets, according to industry participants.
The £2.7bn Schroders Capital UK Real Estate fund received redemption requests worth £65.3mn in the second quarter of this year, which were due to be paid by October 3. Schroders has paid £7.8mn towards meeting the withdrawal requests and said the outstanding balance would be deferred until “on or before” July 3 next year, in line with rules that allow it to push back redemption requests 24 months.
This story originally appeared on: Financial Times - Author:Adrienne Klasa
