Aviva Investors, an asset management unit of the British insurer Aviva, said on Tuesday that it had suspended requests from investors to exit its British real estate fund.
It is the second large British real estate fund to suspend redemptions by investors after the referendum last month in which Britain voted to leave the European Union, a decision that has raised uncertainty about the strength of the country’s real estate market.
Aviva halted its £1.8bn UK property trust blaming “extraordinary market circumstances” just a day after Standard Life Investments suspended its £2.9bn UK real estate fund.
That followed a rapid increase in investors trying to liquidate – cash in – their holdings. One expert said it was only a matter of time before other funds followed suit.
The Aviva Investors Property Trust was worth 1.8 billion pounds, or about $2.4 billion, at the end of May. Aviva Investors manages about £290 billion, with more than £30 billion allocated to real estate and related assets under management.
“The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust,” Aviva Investors said in a statement.
“Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect.”
M&G said of its £4.4bn fund: “Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading.
“This will allow the fund manager time to raise cash levels in a controlled manner, ensuring that any asset disposals are achieved at reasonable values.”
It added that it would review the suspension every 28 days. The announcements came as listed real estate funds fell sharply in Tuesday trading in the wake of Standard Life’s decision. Meanwhile, the Bank of England’s Financial Stability Report pointed to the risks facing the commercial property market after the Brexit vote.
Standard Life’s shares fell nearly 4 percent in afternoon trading in London, while Aviva’s shares were down 3 percent. Legal & General, another British insurer, and Aberdeen Asset Management were each off 6 percent in afternoon trading.
The British Land Company and Land Securities Group, two big British real-estate investment trusts also saw their shares decline in afternoon trading in London.