Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1025386

Eight-year wait over for trapped property fund investors

Investors in Glanmore Property, which was brought low by the 2008 financial crisis, will finally start to get their money back from the fund’s liquidators.

 
Eight-year wait over for trapped property fund investors
 

Investors may view something is better than nothing after waiting eight years to get the bulk of their money back from a toxic property fund.  

In the first payment by liquidators, investors who were advised to purchase the over-leveraged Glanmore Property fund - an Isle of Man investment scheme marketed by Friends Provident - have been offered £2.38 per share, or 84% of the £2.82 share value on a net asset value of £42 million. 

At a peak in 2007 before the credit crunch, the fund reported total assets of £1.2 billion. The fund breached its lending covenants in 2009 and after refinancing, saw its value marked down by 92%.

It was not immediately clear whether the same terms were being offered to non-advised investors who put money directly into the fund. A further distribution remains pending on a further asset sale, and subject to liquidation costs.

Liquidators James Robert Toynton and Ben Alexander Rhodes of Grant Thornton did not reveal if it was possible to estimate when a further distribution would take place. 

The fund was managed by Cardales, which was acquired by Tilney Asset Management in 2004, and subsequently bought by Deutsche Bank in 2006.

Back in 2014, the fund’s board decided to extend the block on redemptions by a further 87-months, with investors potentially being trapped until 2020.

However, after finally paying off its debts following three asset sales worth £52.56 million, the fund was placed into members’ voluntary liquidation in December 2016. There was another sale in 2016, which realised £12.9 million.

Investors who do not wish to trigger a tax liability will be given the option of rolling over their investment into the Schroder Global Multi-Asset Income fund.

The proceeds for investors who already hold 10 funds through their policy with Friends Provident will be split evenly across the other funds.

In a letter seen by Citywire, Friends Provident, which is now part of Aviva (AV), added that if the investors’ policy is ‘surrendered or subject to a pending withdrawal, a payment will be made as soon as possible following receipt of proceeds from the joint liquidators’.

2 comments so far. Why not have your say?

PaulSh

Jun 15, 2017 at 09:28

Clearly there were specific circumstances surrounding the failure of this particular fund, but in general, the FCA should forbid open-ended funds from holding large illiquid assets such as property. Wasn't the post-Brexit property fund panic enough evidence that the FCA should act?

report this

HR Man

Jun 15, 2017 at 15:17

But that would really limit investors who want to find a easy way to invest indirectly into property- a number of well respected funds such as M&G/Standard Life would have to close their vehicles.

I would have thought the better way would be to ensure that each fund has sufficient cash to deal with redemptions - those that did this (L&G for example) seemed to avoid suspension.

I do though feel that closed end vehicles are the better (but not the only) option to invest in commercial property

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the shares

  • Aviva PLC (AV)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

OBR: stamp duty cut will drive house prices higher

by Michelle McGagh on Nov 24, 2017 at 07:00

Sorry, this link is not
quite ready yet