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Troubled property fund confirms £1.1bn float plans

by Jun Merrett on Jun 02, 2014 at 10:52

Troubled property fund confirms £1.1bn float plans

The troubled Brandeaux Student Accommodation fund has confirmed it will float its portfolio in a bid to pay back investors.

The £1.1 billion portfolio will be acquired by Liberty Living, a brand of the Brandeaux Student Accommodation fund, who will then launch an initial public offering of its ordinary shares.

The Brandeaux group said the float would create liquidity to allow it to pay back its investors through redemptions, something that the group has struggled with in the past.

The group r suspended its six open-ended funds in July 2013 and started winding them down in January as the illiquidity of the portfolios meant it could not meet redemptions.

In a London Stock Exchange announcement, the group said: ‘The global offer will allow the fund, which is currently an open-ended investment company, to create liquidity for its shareholders who want to redeem their investment and provide a structure to facilitate future redemptions.’

5 comments so far. Why not have your say?

DP's IFA

Jun 02, 2014 at 11:15

Unfortunately only troubled due to liquidity as the rest of the business model is sound with good coverage. Another example of press led panic. However investors should have been made aware of potential liquidity issues granted.

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Walter White

Jun 03, 2014 at 15:19

I just don't know who would look at this & see a viable investment. clearly there will be liquidity issues & zero diversification! 2 golden rules of investing broken straight away! maybe the £££££'s of commission made that not seem so important to some!

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DP's IFA

Jun 03, 2014 at 18:02

The rule for investing is not all eggs in one basket. Nearly ALL property funds were suspended when the doo doo hit the fan in 2009. So you advocate NIL investment in property funds other than those that are not really property but Equities in disguise? So the M&G fund for instance is a non starter? Get over the commission thing as not all put clients in investments because of that. te VAST majority do it because it fits. Who ever suggested putting 100% in a property fund? Is a 5% investment classed as no diversification????

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Walter White

Jun 04, 2014 at 12:34

Yes, not all eggs in one basket, a commercial property fund with a selection of assets is very different to one single block of student bed sits! If you steered clients into these absolute car wrecks of an investment then that's fine - as long as it was only 5% of a portfolio - it should not cause too much of a problem to anyone. sorry if I touched a nerve!

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DP's IFA

Jun 04, 2014 at 16:28

Far from car wrecks as there are several blocks of accomodation and if you have ever seen them you would be impressed with the standard. The rental cover and yield is good. The issue has been liquidity not quality. Forced selling due to investor demands for liquidity in an ill-liquid asset is also not the answer. As it happens student accomodation seems to be coming back into vogue as an attractive yielding asset. One other potential complication comes if there is gearing in the fund and the banks act like a bunch of bankers!! Not a nerve but a more pragmatic view of the fund. Also you should look at the make up of alot of the multi asset funds as quite a lot these days have greater than the 5% I used as an illustration.

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