Aviva Investors has sold approximately 45% of the assets of its closed-end real estate fund and will return at least £ 167 million in investor money in the form of an interim payment.
The company announced it was closed the UK open-ended real estate fund valued at $ 367 million
Aviva warned investors at the time that they might have to wait up to two years to get their money back.
It wasn’t immediately clear how much cash was outstanding in the feeder fund, and an Aviva spokesman hadn’t responded to a request for comment prior to the release.
According to a letter from Aviva to financial advisors received from Citywire, 45.6% of the fund’s assets have now been dumped. The proceeds from these sales went into customers’ cash, which can be withdrawn or transferred to alternative funds.
The pandemic has highlighted the fundamental discrepancy between holding illiquid commercial real estate assets in open-ended funds and trading it on a daily basis. When funds were stamped when the exit lock was introduced, they were forced to suspend trading because they were unable to honor redemption requests.
Several asset managers including Aberdeen Standard Investments, Threadneedle and St. James’s Place reopened their funds last fall, but only M & G’s real estate portfolio worth 2.1 billion Trading resumed in May after selling 38 assets to raise £ 702 million.
Aviva decided to close its funds, saying in its latest annual price / performance report that “it has become increasingly difficult to generate positive returns from the asset class” while maintaining the “liquidity necessary to reopen the funds” .
The City Watchdog, the Financial Conduct Authority, opened a consultation on how open-ended real estate funds can be managed in such a way that the risk of exposure during times of market stress in summer is reduced. The results are expected to be published later this year.
Aviva is preparing the first payout from closed-end real estate funds