Aberdeen property fund takes a different tack

With six of the biggest open-ended UK property funds having suspended trading in the past three days, Aberdeen Fund Managers has taken a less restrictive route that enables investors who want to redeem their holdings to do so, but at a lower price.

From noon today, the Aberdeen UK Property Feeder fund dealing price will be reduced by 17 per cent - a process known as a 'dilution adjustment'.

Trading has been temporarily suspended since noon yesterday, 6 July, to enable any shareholders who placed trades at the previous price after noon on 5 July (which would normally have been processed at noon on 6 July) to withdraw their instruction if they wish.

Property funds will stay frozen for months


Aberdeen explains: 'This action has been taken due to rapidly changing commercial property market conditions and to continue to provide liquidity in the fund at a price reflecting those conditions.'

The company stresses that the dilution adjustment is in place 'solely to reflect the need to dispose of properties quickly in order to provide liquidity' for investors who want to exit the market, while protecting the value of the fund for those who want to stay.

It is not a reflection of the value of the fund in a stable market without the current pressure to realise cash for anxious investors.

Chief executive Martin Gilbert says: 'Our focus has been, and continues to be, treating all customers fairly.

'We have worked hard to deliver realistic options to clients: redeem at a price which reflects the relatively penal impact of short-term trading in the property market, or remain in the fund, protected by the anti-dilutive measures we are taking, and look through to the longer-term fair value which we expect to be available in less pressured markets.'

He cautions that 'the property market itself may take some time to find its level', but adds that the underlying attractive fundamentals of the asset class have not changed.

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