Cash in the fund at a level where future redemption requests cannot be met 'until a further orderly sale of assets has completed'
Wednesday October 12, 2022 8:03 am Columbia Threadneedle has frozen trading in one of its retail UK property funds after a depletion in the amount of cash held to pay back the rising number of investors wanting to exit.
In a statement issued on the evening of 11 October, the £492bn asset manager said it had suspended dealing in the £453m UK Property Authorised Investment Fund as well as its feeder, the UK Property Authorised Trust.
Apologies for the paywall, but I cannot find this information anywhere that is not paywalled off.
The crash in the UK has started.
Blackstone limits REIT withdrawals
https://therealdeal.com/2022/12/01/blackstone-limits-reit-withdrawals/?utm_source=internal&utm_medium=after_article&utm_campaign=related_article
Blackstone’s massive real estate fund is limiting withdrawals after a breach of its quarterly repurchase limit.
Blackstone Real Estate Income Trust is tightening redemption requests for the remainder of the quarter, Bloomberg reported. The REIT is already warning that repurchase requests could be limited or suspended in the first quarter.
Withdrawal demand recently exceeded 2 percent of the net asset value monthly limit and 5 percent of the quarterly threshold, according to the REIT. The withdrawal structure of the fund kicked in at that point to prevent a liquidity mismatch.
A rocky ride appeared to be on the horizon for BREIT. As of last month, inflows were slowing down and redemptions were rising. Rising interest rates are hindering the fund’s ability to make acquisitions and wealth advisors started cautioning clients against illiquid investments.
Basically this is a run on a bank… so to speak.
Is it possible that UK investors are following in Florida's lead (Florida Pulls $2 Billion From BlackRock in Largest Anti-ESG Divestment).
BTW, the concern about Woke investments has to do with more than just disagreement with Woke politics. As we know, "go Woke, go broke." Just take a gander at Disney.
Couldn't read the article in detail because of paywall.
bmp
limiting client withdrawals? who do they think they are, a crypto exchange?
Anyone else wondering if any of that money supposedly going to Ukraine might laundered through Ukraibe and going to certain institutional investors.
Reason I wonder is that latest deal, the one with Raytheon. Raytheon’s top institutional investors, for example, include Blackrock.
The £2.7bn Schroders Capital UK Real Estate fund received redemption requests worth £65.3mn in the second quarter of this year © REUTERS
UK property funds limit withdrawals as pension funds shift assets on twitter (opens in a new window)
Chris Flood, Josephine Cumbo, George Hammond and Adrienne Klasa OCTOBER 3 2022
Three UK asset managers have said they are unable to handle heavy demand from investors seeking to withdraw from property funds, in a sign of how the fall in government bond prices is forcing pension funds to reallocate holdings.
Schroders said it will make some redemptions originally due on Monday as late as July next year, while Columbia Threadneedle said volatile market conditions had forced it to switch from daily to monthly payouts. At the same time, BlackRock also imposed new restrictions on withdrawals.
Funds that own hard-to-sell assets have struggled this year when volatility across stocks and bond markets has pushed investors to demand cash back in a hurry.
A liquidity crisis in the UK last week sparked by plunging gilts prices has worsened the situation for some asset managers. Defined-benefit pension schemes, which are major investors in UK institutional real estate funds, have been rapidly selling a broad range of assets to meet demands for collateral.
“It’s a fairly feeble market and you’ve thrown in some volatility. Shifting to monthly redemptions [from daily] reduces your need to firesale assets,” said one adviser to property funds.
Calum Mackenzie, investment partner with Aon, the pension consultants, added, “I think this is part of a longer-term trend by pension funds to [cut risk] by selling off the less liquid assets . . . This trend is now being exacerbated by last week’s short-term liquidity rush by pension funds.”
UK pension funds have been cutting real estate holdings for several months as rising interest rates and slowing activity have weighed on the property market. Tumbling prices of UK government debt have also increased the proportion of funds’ portfolios in real estate, prompting some to reduce their exposure.
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These forces have intensified at a point when conditions in private markets including equity, real estate and credit, are already fraught. A sharp deterioration in lending conditions has made it difficult to get deals done in unlisted assets, according to industry participants.
The £2.7bn Schroders Capital UK Real Estate fund received redemption requests worth £65.3mn in the second quarter of this year, which were due to be paid by October 3. Schroders has paid £7.8mn towards meeting the withdrawal requests and said the outstanding balance would be deferred until “on or before” July 3 next year, in line with rules that allow it to push back redemption requests 24 months.
“It is expected that the deferred redemptions will be paid following successful completion of future asset disposals,” said Schroders.
It is in the process of selling Jubilee House, a tower block redevelopment in Stratford, east London, that it bought in 2013 for £11.9mn. Schroders has signed a contract to sell it for £63mn in a deal that is expected to be completed by April 2023.
Columbia Threadneedle has also introduced new arrangements for redemptions for the £2.3bn Threadneedle Pensions Pooled Property fund, which means investors will be able to make withdrawals on a monthly basis rather than daily, citing “liquidity constraints resulting from the recent market volatility and a subsequent increase in redemption requests”.
BlackRock, the world’s largest asset manager, has also imposed redemption restrictions on the £3.5bn BlackRock UK Property fund after receiving significant withdrawal requests in the second quarter.
These restrictions echo previous crises when asset managers imposed “gates” to prevent investors from making withdrawals from daily traded property funds in the wake of the Brexit vote and during the early months of the coronavirus pandemic in 2020. In both of those instances, professionals valuing assets held by the fund struggled to put an accurate price on commercial real estate projects.
https://www.ft.com/content/34f679be-714e-4201-a8b3-cc0e96acc1a1
Then the "trust" in a "fund" which hasn't got the "funds" to allow an investor to withdraw says "continue to trust us" as we "restrict" access to those funds.
What has grown up in the last decades has been a plethora of "funds" many of which are likely mostly out of funds. Like the imaginary money sold as cryptocurrency, those operating these schemes convert the imaginary in to real when these "managers" buy real property for themselves. Ponzi schemes abound. :P" If you cannot have access to "your" investment, in whole or part, it is to that degree no longer yours. Trust is not currency, and hope is not a strategy.
They don’t have the cash to cover their deposits. This will not end well.