FTSE 100: 6812.00 ▲ 8.13 (0.12%)
Resolution’s UK Property fund sold more than £31.5 million in property during February as it sought to prop up liquidity levels in the £524 million bricks and mortar offering.
The overall value of the ResolutionAsset UK Property Acc fund fell 1.3% from £531 million over the month. After the sale of eight properties it now has 11%, or £58 million, of its total assets in cash.
Elsewhere, commercial property funds continued to suffer the market downturn although February losses largely resembled a steady grind rather than the nose dive of late 2007.
Skandia Investment Management’s Skandia Property Acc fund suffered the worst losses during February with the underlying portfolio down 3.9% to £367 million from £382 million.
The Legal & General UK Property R Inc trust followed with its portfolio worth 3.3% less at the end of February, down to £231 million from £239 million at the end of January.
The M&G Property Portfolio Sterling A Inc fell 1.7% during February to £923 million from £941 million, although a spokesman said that it maintained liquidity levels of more than 10%.
Two fund providers who took the hardest hits at the end of the last year, New Star and Norwich Union, emerged from the month relatively unscathed, suggesting that a rumoured ‘short, sharp shock’ re-pricing strategy had succeeded in clearing the pain.
Norwich Union was optimistic that it had ridden out the worst of the downturn and that redemptions had slowed, a spokesperson said.
‘We would never want to call the bottom of the market but we have seen redemptions fall 75% from their peak in December,’ said the spokesperson.
‘Our liquidity levels have stabilised and we expect that we will even be able to report a rise of 0.5% by mid-month.’
Alarm bells about the effect of redemptions and property price falls were first set ringing in mid-autumn when Citywire revealed that Norwich Union cash levels had fallen by £22 million or more than 6% in less than three months.