With UK Property Funds Collapsing, House Price Expectations Join In
London's property prices are collapsing as the over-leveraged day-traded funds liquidate their prime holdings to meet investor redemption calls. As Financial Times reported, property prices in London are falling thanks to a mass liquidation of assets in the wake of Brexit investor worry.
On Thursday, Citi noted the impact the current property price decline is having on expectations. The impact of seven funds gating in client money to prevent runs on day-traded property funds is having on future expectations is massive.
Aside from gating in client money, Aberdeen (which began trading again Wednesday) told clients if they want to redeem capital they would only get $0.83 for every $1.00 invested. The UK property fund haircut has spooked London citizens and the global community.
It's not surprising to see expectations for future prices declining, especially considering the value of properties sold and who is selling.
Henderson Global Investors reportedly sold a £220 million property at 440 Strand in London. Aberdeen Asset Management has also started marketing some of the best property in the firms portfolio. Aberdeen put BT's National Distribution Center on the block along with property at 10 Hammersmith Grove, which houses the headquarters for a Twenty-First Century Fox Inc (NASDAQ: FOXA) subsidiary.
Aberdeen Asset Management, which suspended its fund for a shorter period than the others — until July 13 — has begun marketing properties including an office building at 10 Hammersmith Grove, the UK headquarters of Fox International, a division of 21st Century Fox.
Henderson’s building at 440 Strand has been occupied by Coutts since 1904 and is let to Royal Bank of Scotland, which owns the private bank, until 2037. The building offers secure income of a type that appeals to large institutional investors and also contains retail and restaurant units.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.