Student property investment firm Brandeaux has suspended its British Virgin Islands-domiciled fund range, citing liquidity problems and the impact of the Financial Conduct Authority’s Ucis ban.
The asset manager, which focuses on student accommodation, residential ground rents and reversionary properties, made the move after witnessing an increase in investor redemption requests coupled with poor liquidity in the property market.
A letter to investors from chief executive Roger Boyland and chairman Kay Brandeaux says: “Brandeaux has encountered its share of ‘rocks on the runway’, some more formidable than others.
“Today we are again in a position where there is uncertainty in the market combined with liquidity pressure from investors wishing to redeem their investment. Therefore, we have taken the difficult decision to suspend all Brandeaux funds.”
Brandeaux adds the FCA’s ban on the promotion of Ucis to most retail investors has contributed to the “significant challenges” being seen by open ended property funds when it comes to liquidity, as it has led to an increase in redemption requests and fewer subscriptions from new investors.
The firm manages the £1bn Brandeaux Student Accommodation Ground Rent Income fund as well as the Ground Rent Portfolio and Ground Rent Portfolio Plus funds and the Brandeaux Dual Asset funds.
The company says the funds are “all performing positively” and there is no reason for investors to panic. It plans to issue an update at the end of July, or earlier if there is anything to report.
Charles Stanley Direct head of research Ben Yearsley says: “These are the problems you have with investments such as commercial property in an open ended fund structure.
“This is no different to what happened four or five years ago when a lot of property funds were hit with six month delays and redemptions as the markets were crashing. It highlights the problems of illiquid investments.”