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Aberdeen investors in redemption U-turn as offloads begins

After reviewing a number of redemption requests from investors, the real estate asset manager has announced that many have now been withdrawn. The firm also confirmed it had placed certain properties on the market to meet liquidity needs. 

London-based real estate asset management firm Aberdeen Asset Management has confirmed that many of the investors who submitted redemption applications from two of its open-ended funds last week have now withdrawn their requests.

The firm has also announced that it has extended the six-day suspension of trading in the two funds for two more days, until 12 noon tomorrow. Aberdeen has also placed certain properties contained in the funds on the market in a bid to improve their liquidity status.

Last week, seven UK open-ended commercial retail funds suspended trading after a torrent of redemption requests from jittery investors keen to withdraw their cash in the aftermath of the Brexit referendum. In addition to Aberdeen, the seven firms included Standard Life, Aviva, M&G Investments, Henderson Global Investors, Columbia Threadneedle and Canada Life. In total the seven funds hold around £15 billion ($19 billion; €17.8 billion), meaning around 60 percent of the UK commercial property held in such vehicles was under lock and key.

In response, Aberdeen Asset Management announced it had halted trading in the Aberdeen UK Property Fund and the Aberdeen UK Property Feeder Unit Trust, for an initial 24 hours. The following day the firm extended the deadline for a further six days until 12 noon, July 11, stating that any investor wanting to withdraw capital from the funds after this date would need to accept a 17 percent price reduction.

But with the deadline expiring, the firm opted to extended it until tomorrow in order, it said in a statement, to provide additional time for investors to consider their options and ensure that all customers are treated fairly. “Following the application of the dilution adjustment the vast majority of trades submitted prior to temporary suspension last week have been reviewed and, in many cases, have been withdrawn by investors,” said Martin Gilbert, chief executive of Aberdeen Asset Management.

“Whilst we are in a good position to lift the suspension [yesterday], given the exceptional circumstances and specific requests we have received from two large platforms, we believe it is appropriate to allow a further two days for remaining investors to be contacted in the interests of treating all customers fairly,” he added.

To help the firm meet its redemption requests, it placed a handful of London commercial properties on the market, including on Oxford Street and Hammersmith Grove. Gerry Ferguson, who leads the firm’s UK pooled property funds told City AM, a local business newspaper: “A limited number of properties are being marketed and we will seek the highest prices achievable for our investors as is the normal practice.”

Meanwhile on Friday, the Financial Conduct Authority (FCA), the City’s watchdog, issued guidelines reminding fund managers of their obligations to investors during periods of disruption.

A spokesman for the FCA said: “As Andrew Bailey, FCA chief executive, said at the Financial Stability Report press conference last Tuesday, the ability to suspend is built into the structure of these funds. The purpose is to create a pause to allow an orderly process of revaluation to happen without differential treatment of investors.”