Interactive Investor

Columbia Threadneedle to reopen shuttered property funds

14th September 2020 11:25

Hannah Smith from interactive investor


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Six months after putting suspensions in place, one of the big property funds is re-opening its doors. 

Columbia Threadneedle is preparing to reopen the £1 billion Threadneedle UK Property Authorised Investment Fund (PAIF), which has been shuttered since March.

It will lift the temporary dealing suspension on the PAIF and its feeder fund, the Threadneedle UK Property Authorised Trust, on 17 September. The funds invest in physical commercial property such as warehouses, offices and retail around the UK.

The group suspended dealing on 18 March after the fund’s independent property valuer, CBRE, deployed a “material uncertainty clause” because property assets had become impossible to value accurately in the face of Covid-19 market panic. CBRE has now lifted the clause on the Threadneedle fund, giving the green light that its assets can now be correctly valued.

“We appreciate that suspending dealings in the fund may have caused some inconvenience for our clients, however, the decision to suspend dealing meant that no unit-holders would be disadvantaged and ensured the fair treatment of all investors at a time of exceptional market uncertainty,” says Gerry Frewin, manager of the Threadneedle PAIF.

“While short-term property returns turned negative during the first half of 2020 due to Covid-19 and the resulting uncertainty in markets and economies, capital volatility has been easing, and the longer-term case for property remains compelling on an income and portfolio diversification basis.”

Earlier in the year, fearing a wave of redemptions, open-ended property funds across the marketplace suspended dealing to protect their existing investors from being disadvantaged by those investors wanting to sell. Investors have had more than £20 billion trapped in property funds for many months and are now waiting expectantly for the next vehicles to reopen.

CBRE also values property funds for Janus Henderson and Aegon, leading to speculation that they might be next to open their doors. Although funds run by M&G (which suspended in December 2019) and Aberdeen Standard have had their material uncertainty clauses removed, they have not yet taken the decision to resume trading.

In June, BMO Property Growth & Income, a portfolio with lower exposure to physical property assets than many of its competitors - became the first property fund to reopen.

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