Standard Life suspends trading in UK property fund

mystic_trev

Standard Life Investments has suspended trading in its UK property fund blaming "exceptional market circumstances" following the EU referendum result.

The fund manager said the number of investors asking to withdraw their money had increased following the vote.
"The suspension was requested to protect the interests of all investors in the fund," it said in a statement.

The last time Standard Life stopped investors taking their money out of the fund was during the financial crisis.

http://www.bbc.co.uk/news/business-36708844

It'll be interesting to see what happens to other funds, and to REIT prices tomorrow.

Thrugelmir

Shares in REIT's are traded independently of the underlying security. Unit trusts own the property directly. So have to sell the actual assets to meet the units being liquidated and redeemed. If there's insufficient new money being invested.

mystic_trev

Commercial property values have come under pressure since the referendum result because of doubts about London's attractiveness as an investment destination outside the EU. Given the uncertainties, Henderson, Aberdeen, Legal & General, M&G and Standard Life had all applied "fair value adjustments" to fund values of 4-5%. There have been bigger falls in the value of quoted property funds or real estate investment trusts (REITs) with some dropping by 20%; funds based in central London have taken the biggest hit. Earlier today, there was a big fall in the purchasing managers' index of the construction sector, taking it to its lowest level since 2009.

http://www.economist.com/blogs/buttonwood/2016/07/after-brexit-vote?fsrc=scn/tw/te/bl/ed/afterthebrexitvotethefirstsignsofpostbrexitfinancialstresspropertyfundsuspended

kilby_007

For someone who's naive to stocks & shares, what exactly does this mean then? They've frozen trading, does that mean that people who have invested can't withdraw their funds? Is that legal?

lisyloo

Yes to your first question in exceptional circumstances.
Yes to your second but must be regularly reviewed and regulator kept informed.

Marktheshark

Basically, some firms that have losses to hide, are jumping on the bandwagon.
We may have seen the greatest con trick on earth here.

Was this brexit that looks like it will never happen a clever trick for the financial market dealers to use as an excuse as to where all the money has gone ?

wotsthat

kilby_007 wrote: »

For someone who's naive to stocks & shares, what exactly does this mean then? They've frozen trading, does that mean that people who have invested can't withdraw their funds? Is that legal?

Of course it's legal. You don't decide to sell property one day and expect to see the cash the next.

michaels

lisyloo wrote: »

Yes to your first question in exceptional circumstances.
Yes to your second but must be regurgitate reviewed and regulator kept informed.

Whilst far from ideal it obviously makes sense that if everyone heads for the door simultaneously all lose out, all are better off if any selling is done in a controlled fashion.

As stated above the safer way to invest is to buy shares in a property fund that are tradeable and thus price discovery can maintain a liquid market.

lisyloo

michaels wrote: »

Whilst far from ideal it obviously makes sense that if everyone heads for the door simultaneously all lose out, all are better off if any selling is done in a controlled fashion.

As stated above the safer way to invest is to buy shares in a property fund that are tradeable and thus price discovery can maintain a liquid market.

I'm confused.
Isn't it shares in a property fund where trading has been suspended?

Safer than what?

DiggerUK

The legality of what they have done is not the issue. What is revealed here is a crisis of liquidity.....they should be able to pull down on company reserves, which are obviously inadequate.

Forget blaming Brexit, it's the economy stupid..._

cells

DiggerUK wrote: »

The legality of what they have done is not the issue. What is revealed here is a crisis of liquidity.....they should be able to pull down on company reserves, which are obviously inadequate.

Forget blaming Brexit, it's the economy stupid..._

Such funds are never meant to be that liquid.