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Granit

Reit/property Fund Watch - Multiple Merged

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I haven't seen this picked up by the FT or Bloomberg yet but SL suspended trading in one of their funds for a month today. Big news.

http://www.fundstrategy.co.uk/standard-life-suspends-trading-2-7bn-property-fund/

http://www.cityam.com/244734/standard-life-investments-suspends-trading-uk-real-estate?utm_source=dlvr.it&utm_medium=twitter

Several funds writing down value of property early in the FT yesterday (including SL)

https://next.ft.com/content/cd9b1548-3f9e-11e6-8716-a4a71e8140b0

edit: added cityam link

Edited by Granit

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Interesting... are there any residential funds we should be keeping an eye on?

Answering my own question - no, not for the UK it seems. One did try but, well.

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The FT are obviously getting their news from HPC, finally getting around to writing an article:

The last property crash in the UK in 2007 was preceded by a wave of similar forced gatings by funds struggling to meet investor demands for cash, which led to firesales of property that added to the pressure on an already falling market.

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This is a £ risk problem rather than a property risk problem.

[Well, they're the same thing for overseas investors. But UK pensioners wallowing in their property portfolio won't be thinking they're 10% down compared with this time last month]

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This is a £ risk problem rather than a property risk problem.

[Well, they're the same thing for overseas investors. But UK pensioners wallowing in their property portfolio won't be thinking they're 10% down compared with this time last month]

So can be solved by a small rise in rates forward guidance from Carney.

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CmikIm3XgAADtaT.jpg

Actually, I'd say the message is that 'it's the same as last time'.

Last time (08) everyone thought that the financial world was about to implode, but they put measures in place to ensure that the bad things were kept at bay.

Now, we might think that they've been stoking up problems for the future (today), but the financial markets don't see it that way.

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Actually, I'd say the message is that 'it's the same as last time.

Last time (08) everyone thought that the financial world was about to implode, but they put measures in place to ensure that the bad things were kept at bay.

Now, we might think that they've been stoking up problems for the future (today), but the financial markets don't see it that way.

The current financial markets are not connected with reality.

They know if anything goes or even might go wrong (ie brexit) they will simply hit the print button.

Edited by GreenDevil

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Some of you may recall me posting late last year ago about a very wealthy chap I know of who was forecasting a massive ramp up in gold this year. Lives overseas, has lots of business connections in Oz and China. VERY well connected.

Anyhow, he posted today that he has sold all his commercial property in Oz and only now has his home remaining. Said that when he had bought the properties they were averaging about 11% yield but were down to 4% by the time he sold.

He says that Oz house prices have been ramped up massively by the Chinese but that the Chinese now have a shortage of hard currency. He - and this is just his view folks - thinks that loads of Chinese will be forced to walk away from property they have bought in Oz in the coming years. He reckons - I think this is too extreme - an 80% fall in Oz property values is coming.

He is planning to buy back in around 2020 IIRC.

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Some of you may recall me posting late last year ago about a very wealthy chap I know of who was forecasting a massive ramp up in gold this year. Lives overseas, has lots of business connections in Oz and China. VERY well connected.

Anyhow, he posted today that he has sold all his commercial property in Oz and only now has his home remaining. Said that when he had bought the properties they were averaging about 11% yield but were down to 4% by the time he sold.

He says that Oz house prices have been ramped up massively by the Chinese but that the Chinese now have a shortage of hard currency. He - and this is just his view folks - thinks that loads of Chinese will be forced to walk away from property they have bought in Oz in the coming years. He reckons - I think this is too extreme - an 80% fall in Oz property values is coming.

He is planning to buy back in around 2020 IIRC.

You'd have to day that's about right.

70% off in parts of London make sense.

Ad the man says....

Wages... Meet pricrs

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So what happens when they unfreeze? They will of sold property and liquidity will be back?

Or they just unfreeze until liquidity dries up again, and freeze again?

so it will just keep snowballing from now on?

Great fun. nothing like a freeze to cause a panic.

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Well, to me it looks like Osborne has set up financial crisis two to kick in around about 2019, seems familiar.

Only this time in my limited observation, they appear to be building a lot of unaffordable homes.

Remember the ghost developments in Ireland and then what happened next.

If things don't change there will be real trouble.

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I think these two funds

SLI Ignis UK

UK Property Fund

have been rolled into the now closed fund. As of end Q1 the SLI ignis had a "liquidity balance" (cash and equivalents i assume?) of 15.6% and the other had 17.9% of "cash and other", they're approx the same size so lets say the new fund has (had lol) 16% liquid assets.

More PAIFs

Henderson (£3.91bn) has 14.3% of cash

Aberdeen (£3.4bn) 19% cash

L&G (£2.5bn) 19% cash

They all have similar liquid cash and all have the same problem of a liquidity mismatch and an inability to value their properties. It seems like the problem could easily spread to all of the other open enders. SL does seem heavy on London/SE so maybe it's getting hit with redemptions harder than the others.

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So why would this fund have a problem - pure liquidity? People withdrawing money and the fund simply not having enough and unable to sell property to cover the cash outflows?

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So why would this fund have a problem - pure liquidity? People withdrawing money and the fund simply not having enough and unable to sell property to cover the cash outflows?

Yeh exactly that, they're not leveraged. They also don't know how much to pay in redemptions because they've got no idea what the property portfolio is worth at the moment. They've only reduced fair value by 4-5% which is probably optimistic.

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One day soon, maybe not today, maybe not tomorrow, but soon...

I think I am going to be having a bonfire in my garden. I will use scrunched up pwopurdee supplements and a ceremonial vase full of twigs to get it going. It will be crowned with some "for sale" signs stolen from local BTL 'investments'

I shall be dancing around it clutching a can of cheap and vile strong lager singing

"ere we go, ere we go, ere we go!"

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Let's be honest it's going to come down to what the boe decide to do in response.

Property fund down, house builders down and estate agents down. All the ducks are lining up now but we have seen this before so who knows what will come.

I nearly bought a house a few weeks ago, think I may have dodged a bullet there!!

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It was a liquidity crisis what did for Northern Rock. If Standard Life don't have adequate assets, or even the ability to secure short term loans, then it does not look good going forward.

Correct me if I'm wrong, but isn't a business that relies on cash coming in, to pay off the investors cashing out, and not being able to pay, a Ponzi?..._

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I met up with a friend this weekend who works in commercial property valuation for deloitte. He said UK commercial property funds he's looked at have booked a 7-10% drop in portfolio value so far since brexit, and a lot of open ended funds are likely to close for redemption over coming weeks

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