Henderson Global Investors has joined its UK open-ended property fund management peers in shuttering its retail offering as the fallout from the UK’s decision to exit from the European Union continues to batter the country’s property sector.
The firm has become the fourth manager this week to halt redemption requests, announcing today that it would temporarily suspend dealing in its £3.9 billion ($5 billion; €4.5 billion) Henderson UK Property PAIF Feeder Fund “due to exceptional circumstances”.
In so doing, it has followed Standard Life Investments, the asset management arm of Edinburgh-based insurer Standard Life, which suspended trading on its £2.9 billion fund on Monday and Aviva Investors, the investment arm of insurer Aviva, and M&G Investments, the investment arm of pension fund Prudential, which stopped redemptions on their $1.8 billion and £4.4 billion offerings respectively.
The £13 billion of property effectively now under lock and key until Henderson and the other managers are able to offload assets to appease redemption requests is causing consternation among market participants and commentators alike who fear such a sell-off will compound already weakening sentiment towards UK bricks and mortar.
Henderson said: “The suspension has been implemented to safeguard the interests of all investors. Uncertainty generated by the European Union referendum has had a negative effect on market sentiment and led to substantial withdrawals from property funds. A cash liquidity buffer is typically held to meet redemptions but the pace and size of redemptions has increased to abnormally high levels following the referendum result. This has put exceptional liquidity pressures on the fund, exacerbated in recent days by the suspension of other direct property funds.”
The firm added: “We will announce a date for the re-opening of the fund and feeder when we are comfortable that we have sufficient cash to meet client redemption intentions plus a sufficient liquidity buffer to meet any fresh redemptions.”
In a further fallout from last month’s Brexit vote, investment transactions have fallen sharply, with JLL, the global property advisory firm reporting that 11 percent of its UK pipeline of deals have been withdrawn in the aftermath of the vote.