Aviva Investors to reopen property trust

Added 23rd November 2016

Aviva Investors will resume dealing in its £1.5bn Property Trust on 15 December, the last of the major property funds to reinstate trading since widespread suspension took place over the summer.

Aviva Investors to reopen property trust

The group wrote to investors on 5 July to inform them of the temporary suspension in dealing, alongside many peers that faced mass redemption requests as the Brexit vote saw investors panic about a possible UK property crash.

Yet over the past two months, Columbia Threadneedle has lifted the suspension on its UK Property Authorised Investment Fund (PAIF) and its feeder fund, Standard Life Investments resumed trading on its UK Real Estate Fund, Henderson Global Investors reopened its UK Property PAIF and its feeder fund and M&G Investments resumed trading on M&G Property Portfolio earlier this month. Aviva was the last of the major funds in the space to reopen its fund.

The trust confirmed it had no forced sales, and sold 11 properties between the EU referendum vote and 17 November, totalling £212m.

“The temporary suspension has allowed us to be selective with our orderly sales programme, and ensure the retained portfolio remains robust and well diversified,” a statement from management said.

“Prices achieved have been broadly in line with market valuation changes since the EU referendum vote.

“The sales programme has ensured that the remaining properties align with the trust’s strategy and position the trust to maximise value and deliver performance for investors going forward.”

As sentiment toward the asset class has improved and valuations have stabilised following the initial fallout of the vote, Aviva Investors said “healthy levels of liquidity” and competition among potential buyers had returned to most real estate sectors.

It added: “The yield on property remains relatively high in a low interest rate environment, and the case for the asset class within a balanced portfolio remains strong for the long-term investor.

“We believe real estate is priced favourably relative to other more volatile asset classes. There are of course some headwinds to growth, and these could become more challenging as we move into next year.”

The team noted that the longer-term implications of the Brexit vote would ultimately depend on the economic impact of the vote and the events following the implementation of Article 50.

The team still intends to convert the trust into a PAIF but this has been delayed as a result of the suspension. Investors will be contacted in due course with further updates.

Meanwhile, Mike Luscombe, co-manager of the trust is retiring after 28 years with Aviva Investors.

Andrew Hook, who has been co-manager on the trust since March 2015, will take the lead.  He joined Aviva Investors in 2007 and has more than 15 years’ industry experience.

The group said Hook had been influential in repositioning the portfolio over the past year, adding that he would be supporting by a dedicated and experienced asset management team along with the newly established UK transaction team.

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