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| Aviva halts trading in its property fund as Brexit contagion spreads | |
| (35 minutes later) | |
| Aviva Investors has suspended dealing in its £1.8bn property fund a day after Standard Life made the same move, escalating fears about the UK post-Brexit property market. | Aviva Investors has suspended dealing in its £1.8bn property fund a day after Standard Life made the same move, escalating fears about the UK post-Brexit property market. |
| The suspension sent the pound to a new 31-year low against the dollar, falling 1.8 cents to $1.3090 as the Bank of England said economic risks caused by the referendum had “begun to crystallise”. | The suspension sent the pound to a new 31-year low against the dollar, falling 1.8 cents to $1.3090 as the Bank of England said economic risks caused by the referendum had “begun to crystallise”. |
| Related: Brexit crisis: Aviva suspends property trust as Mark Carney warns of 'crystallising' risks - business live | Related: Brexit crisis: Aviva suspends property trust as Mark Carney warns of 'crystallising' risks - business live |
| Aviva blamed “extraordinary market circumstances” for its decision to halt withdrawals by investors in the fund. | Aviva blamed “extraordinary market circumstances” for its decision to halt withdrawals by investors in the fund. |
| The fund had suffered a surge in requests by investors to redeem their investments because of fears of a property crash after Britain voted to leave the EU. | The fund had suffered a surge in requests by investors to redeem their investments because of fears of a property crash after Britain voted to leave the EU. |
| A spokesman for Aviva Investors said: “The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect.” | A spokesman for Aviva Investors said: “The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect.” |
| Aviva said the suspension would give the fund time to sell assets to remain liquid and meet obligations to investors seeking to redeem their holdings. | Aviva said the suspension would give the fund time to sell assets to remain liquid and meet obligations to investors seeking to redeem their holdings. |
| Related: Standard Life shuts property fund amid rush of Brexit withdrawals | Related: Standard Life shuts property fund amid rush of Brexit withdrawals |
| Standard Life closed its £2.9bn commercial property fund on Monday in what is thought to be the first such move since the financial crisis. It did so after retail investors rushed to cash in their investments after the referendum result raised fears over property values. | Standard Life closed its £2.9bn commercial property fund on Monday in what is thought to be the first such move since the financial crisis. It did so after retail investors rushed to cash in their investments after the referendum result raised fears over property values. |
| Funds investing in property have been popular with investors looking for better returns than cash or bonds. But with fears of a post-Brexit recession mounting investors are concerned that the value of office blocks, retail parks and factories could plunge. | Funds investing in property have been popular with investors looking for better returns than cash or bonds. But with fears of a post-Brexit recession mounting investors are concerned that the value of office blocks, retail parks and factories could plunge. |
| There were signs of strain for the funds last week when Standard Life and rivals Henderson, Aberdeen and M&G reduced the amount investors cashing in holdings would get back by up to 5%. Following Standard Life’s suspension of its fund, shares of property companies and fund managers fell heavily on Tuesday. | There were signs of strain for the funds last week when Standard Life and rivals Henderson, Aberdeen and M&G reduced the amount investors cashing in holdings would get back by up to 5%. Following Standard Life’s suspension of its fund, shares of property companies and fund managers fell heavily on Tuesday. |
| Laith Khalaf, an analyst at City firm Hargreaves Lansdown, said: “The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.” | Laith Khalaf, an analyst at City firm Hargreaves Lansdown, said: “The dominos are starting to fall in the UK commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.” |