Two Years On It’s A Mixed Picture For The Funds Battered By Brexit
The biggest losers in the immediate wake of the Brexit vote two years ago, real estate-wise, were the U.K.’s open-ended funds for private investors.
After the U.K. voted to leave the EU, these funds became the poster child of financial shock in the country. The average investor on the street decided that property was in a bad spot, and there were huge redemptions of cash from these funds.
In response, they shut their doors to new redemptions and sold large amounts of prime property in order to meet requests for cash. In that sense, they were the only forced sellers in the market.
Two years after the Brexit vote, there is a mixed picture for these funds, many of which are among the biggest single investors in U.K. property, research by Property Week shows.
On the whole, the sector is 10% smaller than it was just prior to the vote, with total assets of £18.4B compared to £20.5B at the beginning of June 2016. The change in value comes from a mixture of assets being sold to repay redemption requests and valuation movements.
But within that overall decline some funds have done well. The L&G U.K. Property Fund has grown in value from £2.3B to £3.1B, making it the second-largest fund in the U.K. The largest is the M&G Property Portfolio, which has shrunk from £4.4B to £3.6B.
Funds run by Threadneedle, Kames and F&C U.K. have grown by £200M each, according to PW.
The biggest fallers in value are the Aberdeen U.K. Property Fund, which has shrunk from £3.4B to £2.4B, and the Aviva Investors U.K. Property Trust, which has dropped from £1.8B to £900M. Last week the fund’s largest asset, 20 Soho Square in the West End, was sold for £117M.
Aberdeen was one of the highest-profile casualties of Brexit. It received redemption requests totalling £1.5B in the month after the Brexit vote and to meet these it sold assets including 10 Hammersmith Grove to Brockton for £89M and 355-361 Oxford St. to Norges Bank Investment Management for £124M.