Since I last wrote about the moves by property funds to restrict sales on 24 Nov, the situation has deteriorated even further.
Deutsche Bank, UBS and Morley have imposed a 12 months moratorium on redemptions on their £1.3bn, £2.3bn and £1bn funds respectively. The Managers are imposing this because of their inability to fund potential redemptions from fund assets given the time it takes to sell property in a fund. These lock-ins provide the investor with no ability to trade out of the position regardless of price.
I simply fail to understand why Managers resist there being a secondary market when they themselves refuse to operate a liquid market in their own funds. Ultimately, investors looking to sell should be able to negotiate with buyers prepared to acquire their interests and agree a price that reflects the anticipated falls in value and liquidity constraints.