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SLI suspends trading on £2.7bn UK Real Estate fund

Post-Brexit exodus from commercial property forces Standard Life Investments to suspend trading in its UK Real Estate fund.

SLI suspends trading on £2.7bn UK Real Estate fund

The investor exodus from commercial property funds has worsened since the 'Brexit' referendum result, forcing Standard Life Investments to suspend trading in its £2.7 billion UK Real Estate fund.

In a statement the company said the decision to suspend trading in the fund followed a surge in redemption requests resulting from the uncertainty in commercial property caused by the 'Leave' vote.

The move means investors will be unable to buy or sell shares in the fund for at least 28 days when the situation will be reviewed.

Echoing the announcement when property fund managers recently switched their pricing to discourage sellers, a spokesperson for the SLI said the suspension was designed to protect investors remaining in the fund.

The company pointed out that selling properties took longer than selling equities and despite having previously built up a cash buffer it needed to time to make disposals. 'Unless this selling process is controlled, there is a risk that the fund manager will not achieve the best deal for investors in the fund, including those who intend to remain invested over the medium to long term.' 

The announcement came as figures from the Investment Association showed investors pulled £360 million from property funds in May, fearful of the impact of a downturn in the sector if City firms moved from London and overseas buyers avoided the capital.

The announcement comes a week after SLI lowered the sale price of the UK Real Estate by 5% amid post-Brexit anxiety.

Fund suspensions were a feature of the financial crisis as property fund managers struggled to meet redemption requests during the slump. 

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