Standard Life Suspends Property Fund

Standard Life Suspends Property Fund.

Standard Life has today suspended its property investment funds. This means that if you have a property fund inside your standard life pension or investment you currently cannot make any trades.

This follows a substantial increase in the number of investors looking to crystallise their property fund holdings with Standard Life and switch to other investment sectors.

Many retail property funds are unusual in that they have limited liquidity i.e. they have limited cash reserves. This is because the main investment inside a property fund is illiquid bricks and mortar. The only sources of cash from rents received, new money is invested and selling property itself. It is difficult for a large property fund to react to negative sentiment as it is difficult to sell a property, particularly commercial property, quickly.

We had already warned for the last four weeks that we were watching property funds in our investment alerts and last week issued a "red" investment alert for property funds. This followed just one investment house actually devaluing its property fund by 4% and since then others have followed suit by devaluing their property fund (in short devaluing any properties owned within the fund) by around 5%.

We expect even more pension and investment fund managers to follow suit as the squeeze on property fund liquidity continues as more investors shy away from property, ahead of any anticipated fall and of course any devaluation triggered by investment companies themselves.

If you are still invested in Standard Life's property fund then it is perhaps too late. If you are still invested in other companies property funds then maybe now is your last chance to take action for a number of years.