I don’t know and don’t pretend to know what the long term effects of the UK leaving the European Union will be. We saw in the short term that it sent the financial markets into turmoil and send the British pound to the lowest levels in years. The U.K property market looks like it is now suffering the fallout from Britain’s vote to leave the European Union.
M&G Investments stopped trading in a £4.4 billion U.K. property fund. Aviva Investors suspended trading in a U.K. property fund. Standard Life Investments was the first to cancel trading in its U.K. Real Estate Fund.
The funds were receiving an increase in redemption requests. At some point the funds would need to start selling assets to meet the redemption requests. Investors these ‘open-ended’ funds can get redemptions even though the underlying buildings will several months or longer to sell.
The compliance aspect is the same as that for any fund that can put gates in place to halt redemptions. The key is that a gate is allowed by the fund documents. Then the fund manager needs to make sure that the gate is being lowered to protect the investors overall. I assume the fund managers are taking the position that forced sales for liquidity will depress asset prices and hurt the fund as a whole.
Sources: