http://www.zerohedge.com/news/2016-07-06/dramatic-twist-uk-property-fund-cuts-value-its-assets-17
Instead of suspending trading and implicitly disallowing redemptions, giant fund managerAberdeen, also known as Domino #7 if the UK ok commercial real estate collapse, has forced investors in its UK Property fund to take a 17% haircut wiping hundreds of millions of dollars off its value. The fund stated that shareholders wishing to redeem will do so at a reduced price in order to reflect the current market environment and the fact that short term trading in the property market has "relatively penal consequences."
Unlike similar asset freezes implemented by at least 6 other property funds in the past three days, Aberdeen has not only temporarily suspended trading in its £580m UK Property fund but has also slashed the price of the fund by 17%, and in doing so it has demonstrated just how massive the "liquidity mismatch" bid-ask gap is in times of stress. Trading in the fund, and the Aberdeen UK Property Feeder Unit Trust, has been suspended until 7 July at midday in order to allow shareholders who have placed trades have the option to withdraw if they wish. Those who persist in demanding their money will get 83 cents for every dollar.
Until this latest intervention, over half of the the £25bn in UK property sector assets had already been gated and frozen; thanks to Aberdeen we now also know that the fair value of such CRE property assets is about 20% lower.
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