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10.11.2009
The fact that two of the UK’s leading institutional property fund managers have set up measures to limit cash inflows to their funds highlights a chronic lack of UK investment stock on the market according to investment experts.
Hermes Real Estate and Threadneedle Property Investment are staggering new investment in their open-ended institutional property funds to ensure that managers are not under pressure to deploy cash. The move to limit inflows to property funds marks a sharp reverse to the prevailing trend of the past two years.
Threadneedle has moved to stagger new allocations to the Threadneedle Property Unit Trust, which grew from £310m at the start of the year to more than £400m at the end of the September. The fund has now reached its maximum liquidity limit of 20%, and so new inflows of cash will not be taken until the fund has made acquisitions.
While Hermes has 4% liquidity in its £486m Hermes Property Unit Trust, well below the 10% maximum, it too has moved to stagger new inflows.
Mike Riordan head of City investment at Gerald Eve warned that even if other funds follow Hermes and Threadneedle the problem of demand exceeding supply was likely to continue: “This move underlines the limited supply of good quality investments currently available and the difficulty in deploying funds. Even if this move is followed by additional funds, there still remains a considerable weight of equity seeking a home in the commercial property sector."
Gerald Eve, chartered surveyors and property consultants, make or save money from property - acting for around 40% of the FTSE100 on property asset management, agency and professional matters.
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