UPDATE 1-UK property funds hesitate over unfreezing as valuation uncertainty lifts

(Recasts with comment from funds)

By Carolyn Cohn

LONDON, Sept 9 (Reuters) - Fund managers said on Wednesday
they would not rush to unfreeze suspended commercial property
funds after British surveyors said they no longer saw any
"material uncertainty" in real estate valuations, which was a
major barrier to re-opening.

Real estate funds aimed at retail investors totalling more
than $8 billion were suspended in March after surveyors said it
was not possible to be sure about valuations due to the
pandemic. Institutional funds in the 70 billion pound ($90.56
billion) UK property fund sector quickly followed suit.

Rules governing property funds meant they should consider
suspending in circumstances where surveyors issued such a
warning, the Association of Real Estate Funds reminded its
members in March.

On Wednesday the Royal Institution of Chartered Surveyors
said its forum on the issue "recommends a general lifting of
material valuation uncertainty", pointing to the easing of many
restrictions imposed on households and businesses as a result of
the coronavirus pandemic.

Surveyors should continue to assign the material uncertainty
tag to "some leisure and hospitality assets" on a case-by-case
basis, it said in a statement.

But analysts said any reopenings of the funds could risk a
flood of investors scrambling for the exits, particularly due to
ongoing worries about the pandemic and a no-deal Brexit.

A spokesman for Aegon Asset Management said its fund would
not reopen at least until after its next valuation date at
end-September, and the firm would also consider liquidity levels
and property transaction volumes before making a decision.

Aberdeen Standard Investments also did not expect
its funds to reopen before Sept 30 "at a minimum", it said in an
emailed statement, adding that it needed to look at cash levels,
the real estate market and expected investor flows.

Janus Henderson and M&G said their funds
remained suspended and they would update investors in four weeks
at the latest.

Aviva and Columbia Threadneedle said they were
monitoring the situation.

Regulators are unhappy about funds such as the retail
property funds, which invest in illiquid assets but allow
investors to take their money out every day. Many of the funds
also suspended after Britain's vote to leave the European Union
in 2016.

The Financial Conduct Authority last month proposed that
investors in property funds should wait up to six months before
they can get their money back, to avoid a stampede for the exit
leading to widespread suspensions in rocky markets.
($1 = 0.7730 pounds)
(Reporting by Carolyn Cohn; Editing by Raissa Kasolowsky)