Virtually all property funds have been suspended during the coronavirus lock down period. They were suspended because investors were worried about the commercial property market and fund managers were worried about the liquidity of funds as not all rents were being collected and if too many people want to disinvest i.e. ‘cash in’ or switch out of their funds, the property funds may run out of money and be forced to sell property assets either at ‘knock down’ prices or indeed take a long time to sell. This may not be in the best interests of ‘loyal’ investors who remain in the fund if assets are being sold at a discount thus devaluing their investments.
In addition, surveyors were applying a Material Uncertainty Clause (MCU) to property valuations during lock down meaning that valuations ‘were not worth the paper they were written on’. Surveyors have now started to withdraw MCUs meaning accurate valuations and as commercial tenants get back to work, rents are starting to flow back.
We have seen over the last week a number of property funds opening back up including Aviva and the biggest property fund of all, Legal & General, has been confirmed as reopening in October.
This will mean those that wish to invest in property funds at relatively low prices compared to last year can do and those that either wish to sell out or if you have a property fund as part of a pension transfer you will shortly be able to do so.