Standard Life suspends trading in UK property fund

cells

These types of funds tend to grow and shrink. What that means is if someone wants to invest £100m with the fubd they will go out and buy £100m of property and issue the buyer a corresponding shares. Lolewose if someone wants to cash out £100m they will go and sell £100m of property and buy out their shares.

However they have a small pool of funds maybe say 5% of the value of the fund and that is used as a buffer. So if someone wants to sell £10m on Monday the fund buys them out strict away and if someone wants to buy £10m on Tuesday the fund issues them the shares straight away. It's a lot more liquid and efficient than selling a £10m property on Monday and trying to buy it back on Tuesday.

Of course during some periods the buffer will deplete and the find manager will need to activate riles that limit withdrawal until property can be sold for cash to continue operating. Its possible the opposite can also happen if an investor nlwanta to buy a billion pounds into the fund the fund will tale it and go buy a corresponding amount of property which might take a few months. So moving in or put isn't quick. However the buffer means maybe 99% of the time it is quick and liquid

cashbackproblems

Aberdeen and Henderson have also both been devaluing their funds

This is huge imo it is the market signalling the immediate confidence in the domestic property market, as more and more gets withdrawn its a vicious cycle and domestic values and demand will inevitably suffer.

I imagine a lot of investment into these will be from the Asian market, who are very concerned about the UK property market and quite rightly

Thrugelmir

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.

What reserves are you talking about? Wouldn't be a property fund if cash was simply left on deposit. Unit trusts have operated in the same manner for decades. People investing would have been fully aware of the nature of the fund.

Having said that offloading major share stakes isn't easy. When a 25% investment in Sainsbury's was sold a few years back. Required 186 broking houses to place the shares and maintain an orderly market.

DiggerUK

Thrugelmir wrote: »

What reserves are you talking about? ..........

Borrowings, if a company like this can't secure short term borrowings, then what state is it in..._

poppy10_2

DiggerUK wrote: »

Borrowings, if a company like this can't secure short term borrowings, then what state is it in..._

They aren't allowed to borrow money to meet redemption requests

DiggerUK

poppy10 wrote: »

They aren't allowed to borrow money to meet redemption requests

If that is the case, I didn't realise they couldn't. But I find it incredible that they can operate without being expected to meet liquidity requirements.
It's stress testing Jim, but not as we know it.

Reminds me of illegal operations when investors cashing out, could only be paid with money of investors buying in, then ooops!..._

Thrugelmir

DiggerUK wrote: »

If that is the case, I didn't realise they couldn't. But I find it incredible that they can operate without being expected to meet liquidity requirements.
It's stress testing Jim, but not as we know it.

Reminds me of illegal operations when investors cashing out, could only be paid with money of investors buying in, then ooops!..._

Sounds as if you don't hold investments of any kind. As not a difficult concept to grasp.

DiggerUK

Thrugelmir wrote: »

Sounds as if you don't hold investments of any kind. As not a difficult concept to grasp.

The concept is very easy to grasp, I just find it difficult to figure out why hard earned money, is willingly put in harms way like this by investors..._

DiggerUK

Next..._

https://www.fundstrategy.co.uk/aviav-investors-suspends-trading-propert-fund/

mwpt

Ouch....

“The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.

Commercial property and the listed builders are taking a massive beating following Brexit vote. I can't see the residential market escaping unscathed but who knows what schemes the government can dream up.