Characterized by their daily liquidity, open-ended real estate funds find themselves faced with the impossibility of valuing their portfolio assets under current circumstances. Suspensions are on the rise, with more than 11 billion pounds already frozen.
The law of series hits the real estate fund industry in the United Kingdom. Strongly invested in commercial real estate, businesses and shopping centers, many funds have just announced the suspension of share buybacks: Kames, Janus Henderson, Standard Life Aberdeen, Aviva… In total, these are funds representing more than £ 11 billion of real estate assets that have frozen cash withdrawals in recent days.
“There is currently a significant uncertainty on the valuation of commercial real estate,” responded the Financial Conduct Authority (FCA), the British policeman of financial markets. “In such situations, a fair and reasonable valuation of commercial real estate funds cannot be established,” she explains, adding that “in these circumstances a suspension is probably in the best interests of investors.”