Thu, Jul 07, 2016 - Page 12 News List

CTBC downplays UK real-estate halt

‘INDUSTRY-WIDE IMPACT’:CTBC Financial Holding said that ‘extraordinary market circumstances’ had led it to move to ‘safeguard the interests of all our investors’

By Ted Chen  /  Staff reporter

CTBC Financial Holding Co (中信金控) yesterday downplayed concerns about the suspension of trading of an England-linked real-estate investment trust amid the Brexit fallout, adding that its clients in Taiwan would not be affected.

On Tuesday, Aviva Investors, the fund arm of one of England’s largest insurers, Aviva PLC, suspended its trading on the UK Property Trust.

CTBC Financial, which became the exclusive distributor of Aviva funds in Taiwan last year, said that its clients would not be affected, as the UK Property Trust is only issued in England, not in Taiwan.

In a statement yesterday, CTBC Financial said that it sells the Aviva Investors European Real Estate Securities Fund, a securities product that invests in other European real-estate investment trusts (REIT) or shares of listed international real-estate companies, whereas the UK Property Trust invests in actual real-estate properties.

However, CTBC Financial acknowledged that the price of its REIT fund products have tumbled amid Brexit-induced market anxiety.

A market panic had compelled Aviva to suspend the UK Property Trust to preserve the interests of its investors, CTBC Financial said, adding that the suspension would help ease uncertainties and fearful sentiments among investors.

M&G Investments Ltd suspended a £4.4 billion (US$5.7 billion) real-estate fund on Tuesday, following on the heels of Aviva Investors and Standard Life Investments after a flurry of redemption requests, Bloomberg reported.

“The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property Trust. Consequently, we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect,” a company spokesman was quoted as saying in a Reuters report.

Trust managers are not likely to sell off their real-estate holdings at the current market prices to satisfy redemption demands from investors, CTBC Financial said.

As the trust invests in real-estate properties, whose liquidity is constrained by the difficulties associated with matching and finding appropriate buyers, the REIT fund it sells remains highly liquid, the Taiwanese company said.

Local regulators have also barred real-estate-linked offshore fund products, CTBC Financial added.

Despite market anxiety, the conditions for a rally are gathering, with UK real-estate prices falling 30 percent, which might be seen as an opportunity for some institutions, the company said.

“With dividend return ranging between 4 and 5 percent, REIT remains an attractive investment option, in light of falling yields for bonds,” CTBC Global Real Estate Income fund manager Chen Wen-ching (陳文卿) said.

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