Scottish Widows has become the latest fund manager in the UK to impose a ban on redemptions from a property fund to safeguard the vehicle's financial position. In an emailed statement, Scottish Widows said it was re-introducing a 180-day delay on withdrawals and switching from its EUR 660 mln Life Property Fund because there are fewer commercial property buyers than usual.
Scottish Widows has become the latest fund manager in the UK to impose a ban on redemptions from a property fund to safeguard the vehicle's financial position. In an emailed statement, Scottish Widows said it was re-introducing a 180-day delay on withdrawals and switching from its EUR 660 mln Life Property Fund because there are fewer commercial property buyers than usual.
The company said market conditions in the UK real estate sector had worsened considerably since October 2008. 'This, in turn, means that we’re unable to sell enough properties at prices that we believe properly reflect the properties' values,' Scottish Widows said.
The continuing deterioration forced Norwich Union and Standard Life to introduce similar restrictions on life and property funds in January this year.
Scottish Widows first locked down the Life Property Fund in January 2008, but was able to lift the ban in August after selling properties. The fund's cash position is low and such vehicles often have to sell properties to repay investors withdrawing their money.
The redemption delay does not apply to death, critical illness claims or at policy maturity. Scottish Widows' other funds, including the Scottish Widows Pension Property Fund, will remain open.
