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Aviva to suspend property fund for up to 8 months

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Aviva Investors expects the suspension of its £1.8bn Property Trust to last for up to eight months.

In a note sent to investors today, the group said the decision on the timing reflects the time it takes to sell commercial properties.

The note says: “It is our intention to re-open the trust for dealing as soon as we can. At the present time we are unable to say when the suspension of dealing in the trust will be lifted as the sale of commercial properties, which is required to increase the amount of cash held by the trust, can take considerable time.

“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.”

Aviva is the first among the six fund groups with suspended property funds to issue a timing on the possible re-opening of the fund.

The asset manager stopped dealing in the fund on 5 July, following Standard Life Investments’ move.

At the time, the firm said “extraordinary market circumstances” led to “a lack of immediate liquidity” in the trust.

Hargreaves Lansdown senior analyst Laith Khalaf says: “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.”

Earlier in August, Henderson Global Investors, which also suspended its UK Property PAIF and feeder fund, reduced the fair value adjustment on the fund from 5 per cent to 3.5 per cent.

However, the fund will stay suspended and receive “a further” review within the next 28 days.

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