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Freki

Bloomberg: Investors want out

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Well seems like the "not so smart money" is attempting to capitalise their gains or cut their losses 

Quote

Investors in a Schroders Plc real estate fund that owns some of London’s priciest offices are seeking to withdraw almost one-fifth of the 836 million pounds ($1.09 billion) pool as Brexit-related worries have mounted, people with knowledge of the matter said.

Quote

In September 2017, investors holding 11.6 percent of Welput asked for their money back, according to the fund’s semi-annual report. The vast majority of these requests to cash out were not matched by new investors and were paid out in June this year using debt that will be repaid by the fund following the sale of a property in London’s Marylebone district, the filings show.

Adding some more debt to your liquidity problem

https://www.bloomberg.com/news/articles/2018-11-06/brexit-fears-said-to-imperil-1-1-billion-london-property-fund

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Depending on it's redemptions policy, there can be an incentive to put redemptions in early "to get to front of queue". The IPF have done a ton of work on this area, and pretty much all the open ended funds (capital structure) where suspended come 2009/2010.

All really boys down to an investment where the capital structure offers liquidity the underlying does not.

In that respect REITS are better, but are hampered by having to distribute 90% of profits as income, leaving little to pay down gearing; and involuntary default events (where LTV rises because values fall).

The PE boys haven't exited entirely from the last cycle so this is all getting rather interesting

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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