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LONDON, Oct 5 (Reuters) - CBRE Investment Management has deferred redemption payments on its UK property fund due to market conditions, it said on Wednesday, joining several other funds taking similar steps to avert a cash crunch following recent turmoil in UK money markets.
Sharp rises in interest rates this year have encouraged pension funds and other institutional investors to switch out of property funds, industry consultants say, as they no longer need to hunt out yield through investment in riskier assets.
Outflows from property funds accelerated as markets reacted to the UK government's fiscal plans announcement on Sept 23. Out of 89 million pounds ($100 million) of capital pulled from property funds by UK-based investors in September, 71 million pounds of this took place in the days following the "mini-budget", according to data from funds network Calastone.
“Due to current challenging market conditions and an unpredictable transaction market resulting in a liquidity mismatch within the UK real estate market, CBRE Investment Management can confirm that it has deferred for one quarter the redemption payments for the CBRE UK Property PAIF," a spokesperson said in an emailed statement.
"This, we believe, is a prudent decision and in the best interest of all investors in the fund."
The fund is aimed at institutional investors.
Rival property funds aimed at institutional investors managed by Columbia Threadneedle, Schroders and BlackRock also said this week they were deferring payments.
However, another major real estate investment manager, Legal & General Investment Management, said it was not deferring payments in its funds.
"Deferral is not in place on any LGIM Real Assets funds although, in very specific circumstances, it remains one of a number of liquidity management tools we have at our disposal to act in the best interests of investors," Mike Barrie, director of fund management for LGIM Real Assets told Reuters by email late on Tuesday. ($1 = 0.8862 pound) (Additional reporting by Elizabeth Howcroft; editing by Alex Richardson, Sinead Cruise and Jonathan Oatis)
