Columbia Threadneedle and Henderson latest to freeze property funds

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Columbia Threadneedle Investments and Henderson Global Investors has suspended dealing in propert funds worth £5.3bn.

The move means more than half the property fund sector is now suspended.

Columbia suspended dealing on the £1.4bn Threadneedle UK Property Authorised Investment Fund and its feeder fund from today.

Columbia Threadneedle says it has “not been immune” to the retail outflows in the sector, with it meeting requests for redemptions from its cash balance.

A statement says: “However, it is expected that these requests to sell will continue for the time being due to uncertainty in the market following the UK Referendum result, therefore the temporary suspension of dealings allows sufficient time for the orderly sale of assets, and protects the interests of all investors.”

The asset manager adds that property should be “part of a balanced portfolio for a long-term investor”.

The firm adds that it went into the EU referendum with a “high level of liquidity” in the funds.

Likewise, Henderson has suspended dealing on the Henderson UK Property PAIF and the feeder fund “to safeguard the interests of all investors”.

A statement from the manager says: “Despite a strong underlying portfolio, the decision was taken due to exceptional liquidity pressures on the funds, as a result of uncertainty following the EU Referendum and the recent suspension of other direct property funds.”

It takes the total assets in suspended property funds to £14.3bn, following the closure of funds at Standard Life Investments, M&G, Aviva Investors and Henderson. This marks more than half the £25bn IA property sector.

M&G Investments temporarily suspended trading in the £4.4bn M&G Property Portfolio and its feeder fund, while SLI stopped trading on its £2.7bn UK Real Estate fund in response to redemption requests, and Aviva Investors suspending trading on its £1.9bn Property Trust. Most recently Henderson suspended dealing on the £3.9bn UK Property PAIF and the feeder fund.

Laith Khalaf, senior analyst at Hargreaves Lansdown, says: “These funds are therefore likely to be closed for weeks and months rather than simply a matter of days. Clearly there has been a knee-jerk reaction to Brexit in the commercial property sector, which may moderate over time.

“Investors in commercial property funds should not make decisions in a panic. Granted the Brexit vote may have the potential to negatively affect the commercial property market in the short run, but long-term investors should be willing to ride out periods of weakness, particularly when there has been such a sharp decline in fund prices without much evidence of a slowdown in the underlying property market.”