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Aviva’s property fund to stay closed for 6 to 8 months

Joanna Faith
Written By:
Joanna Faith

People with money in the Aviva Investors Property Trust will not be able to access their cash for at least six to eight months, the firm has said.

Dealing in the UK commercial property fund has been suspended since 4 July following higher than usual volumes of requests to sell units in the aftermath of the Brexit vote.

In a note to investors, the fund group said the long time frame reflected the time it takes to sell commercial properties.

“In order to lift the suspension we need to ensure that we can meet any requests to sell, buy, switch or transfer units which have been held by us during the suspension period. We are committed to ensuring the Trust has a sustainable liquidity position before we allow dealing to resume in order to protect the interests of all investors,” the note said.

“Property sales may be more difficult to execute in the current environment due to market uncertainty. In disposing of properties, we need to ensure we act in the best interests of all investors.”

A number of UK commercial property funds suspended trading after the EU referendum including Aberdeen Asset Management, Standard Life Investments, Canada Life, Columbia Threadneedle and Henderson.

The Aberdeen fund has since reopened.

The suspensions, which mean investors cannot buy or sell shares in the fund, were put in place after cash buffers held by fund managers were eroded as investors reduced their exposure to property.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said:This is a big blow to investors in the Aviva fund, who are basically now being told they won’t be able to get their money out any time in 2016.

“The wider question is whether this time frame applies across the rest of the sector, and property fund investors would no doubt welcome similar guidance from other suspended funds as to when they might open again, so at least expectations can be set accordingly.”

Khalaf said this highlighted the problems of investing in an illiquid asset class via an open-ended fund.

“Being unable to trade in your fund for the best part of a year is more than a minor inconvenience, and over such a long time period we can expect a natural flow of people who want to access their money for perfectly normal reasons, entirely unrelated to the Brexit vote. These investors will now face the frustration of simply having to sit tight and wait for the doors to open.”