Resolution sells £30m of property as falls turn to steady grind

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.

New Star’s New Star UK Property Inc fell 0.19% over the month while the Norwich Property Inc  fell 0.44% and the  Norwich Property Investment  fell 0.02%.

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.