Columbia Threadneedle will begin dealing again in its £358 million CT UK Property Authorised Investment fund, which was the only direct UK property fund gating after the economic turmoil sparked by the Liz Truss government's so-called mini Budget.
In a statement, Columbia Threadneedle confirmed it will "lift the temporary dealing suspension on the CT UK Property Authorised Investment Fund (CT UK PAIF) and its feeder fund, CT UK Property Authorised Trust with effect from 12.01 on 28 February 2023". It means that the first valuation for dealing will be Wednesday 1 March 2023.
The CT UK PAIF had temporarily suspended dealing on 10 October 2022 following a "significant increase in redemption requests which had led to cash in the fund reducing to a level where future redemption requests would not be able to be met until an orderly sale of assets had been completed".
Since October an asset sales process has taken place, the fund said, raising cash in the fund to a level where it now believes redemption requests can be met. It said the latest action has been taken with the agreement of Citi UK Trustee & Fiduciary Services, the depositary for both funds, and the Financial Conduct Authority has been notified.
The fund added: "The earlier decision to suspend dealing in the CT UK PAIF was made with the aim of ensuring the fair treatment of all our investors whether they were transacting now or investing for the longer term. This decision was reviewed regularly by the [Authorised Corporate Director] Board. We appreciate that the action may have caused some inconvenience for our clients and we appreciate their ongoing support."
Columbia Threadneedle runs two direct UK property funds for retail investors, the CT UK Property and the CT UK Property Authorised Investment. The CT UK PAIF and its Feeder Fund are managed by Gerry Frewin and invest in UK commercial property.
Columbia Threadneedle managed circa £11 billion as in UK commercial real estate assets for retail and institutional clients at 31 March 2022, making it one of the UK’s largest institutional investors in property.
While Columbia Threadneedle's move was the only one recently by a UK open-ended retail property fund it followed the decision by Schroders and BlackRock, along with CT, to impose redemption limits on some property funds open to institutional investors. Other funds followed suit.
The asset managers limited withdrawals from UK property funds in these cases in the face of the declining value of government bond prices.
Funds that own more illiquid assets have faced difficulties when investors ask for cash back quickly in the face of global economic headwinds.
The government's "mini Budget" on 23 September 2022 also sparked a liquidity crisis in the UK as the pound sank and gilt prices weakened.
That intensified the difficulties for asset managers. Defined-benefit pension schemes are major investors in UK institutional real estate funds and they speedily sold less liquid assets such as real estate to cut risk. The falling price of UK government debt has increased the proportion allocated to funds in real estate, which in turn is driving a move to reduce exposure to the asset class.
Those UK fund groups were imposing new restrictions on large “institutional” investors, such as pension funds, that want to withdraw their money.
Asset managers' attitude to real estate sits within a broader attempt to reform the UK open-ended property fund market to prevent the so-called liquidity "mismatch" between daily trading in the funds and the ability to sell the assets.