L&G ups UK property fund valuation by 5%

Added 18th July 2016

The price of Legal & General’s UK Property Fund rose by 4.3% last Friday after the repricing was taken into effect.

L&G ups UK property fund valuation by 5%

The ‘fair value adjustment’ of the L&G open-ended property fund moved from -15% to -10%, the investment management group confirmed on Monday.

The fund was repriced to “continue to reflect a fair price for those investors who might be considering investing, redeeming or remaining in the Fund,” L&G stated.

L&G originally announced on 7 July that it would be implementing a fair value adjustment to its Paif’s underlying property assets, instead of gating its fund as many property managers that week had done. This resulted in a 15% drop in the valuation of the assets within its £2.3bn Paif.

After reassessing the UK commercial property terrain the week after its cut the value of its property assets, the group felt the market was stabilising:

“While it remains difficult to predict the exact impact of the vote to leave on commercial property values, conditions in the market and within our peer group have begun to stabilise since 6 July. Considering this, and the other economic and market metrics which feed into our fair value pricing adjustment, we have reduced it to -10%, representing an improvement of +5%,” L&G revealed.

Coupled with British Land’s first quarter trading update, L&G’s decision to reprice its property fund is “another encouraging sign of life in the UK commercial property market,” said Laith Khalaf, senior analyst at Hargeaves Lansdown.

Though Khalaf admits L&G’s property fund is coping in the current unpredictable economic environment, he does think the “extreme volatility” in the commercial property sector is telling of some serious underlying issues.

“The reduction in the fair value adjustment isn’t an indication of a reversal of flows into the property fund sector, rather it’s a moderation of the mark-down made to the underlying property portfolio in the aftermath of the Brexit vote," Khalaf explained.

“It’s a risky business buying or selling property funds at the moment, while prices are bouncing around so much without any warning, and may turn out not to be truly reflective of the underlying market.

"Once again this serves to demonstrate the limitations of open-ended commercial property funds, and investors need to make sure they are willing to accept these shortcomings before diving in," he warned.

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Premier Multi Asset Global Growth - Alex Farlow
Premier Multi Asset Global...

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Kristen McGachey

Senior Reporter

Kristen joined Last Word Media and the world of financial journalism in April 2016, leaving behind a career in a legal publishing firm as a senior researcher turned assistant editor.

This native Angelino initially moved to the UK in 2008 to complete her undergraduate studies at the University of Nottingham. She subsequently obtained a Masters degree in Philosophy with Literature from the University of Warwick.



Investment Strategy




PA Dublin October 2017
PA Dublin October 2017

Tuesday 10 October
Westbury Hotel, Dublin

PA US 2017
PA US 2017

Tuesday 17 October
Furniture Makers' Hall

PA Channel Islands November 2017
PA Channel Islands November 2017

Tuesday 14 November
Royal Yacht Hotel, Jersey

PA Alternative Ucits November 2017
PA Alternative Ucits November 2017

Tuesday 7 November 
Furniture Makers' Hall

Sponsored Content