What is the cost of having to raise money quickly by selling London property? Almost 15 per cent based on the sale of two properties on Oxford Street, the United kingdom’s busiest shopping thoroughfare, since Britain voted to leave the European Union.Aberdeen Asset Management’s UK Property Fund accepted a 15 per cent price cut to sell a building on the street leased in part to pharmacy Boots on Friday, according to a person familiar with the matter. British Land sold a department store leased to Debenhams after the referendum without taking a discount, said Fergus Keane, a senior director at broker Cushman & Wakefield who was not involved in the sale. Aberdeen and British Land declined to comment.The contrasting outcomes show the discounts that property funds may face as they rush to sell properties to return cash to investors spooked by Brexit. The managers of seven funds overseeing about £18 billion (Dh86.92bn) of property suspended trading after the Brexit vote prompted a slew of investors to ask for their money back.Offering daily liquidity on funds which hold illiquid assets creates a “vicious circle” when redemptions surge and will lead to discounted asset sales, the Jefferies analyst Mike Prew wrote in a July 7 note.”If you have to sell a building in a very short space of time, there is a limited audience of buyers that can do that,” said Stephen Down, an executive director at the estate agent Savills. “That’s the only evidence we are seeing so far of discounts.”Aberdeen, which last week resumed trading in its UK property fund and feeder trust after a week-long suspension, sold the property to Norges Bank Real Estate Management on Friday for £124 million, according to a statement. That is about 15 per cent less than the offer price when it was marketed a few days earlier, according to a person familiar with the matter, who asked not to be identified.British Land, the UK’s second-largest property investment trust, sold the department store leased to Debenhams for £400m on July 7, according to a company statement. That is a yield of about 2.75 per cent, according to JPMorgan, and in line with pre-Brexit yields for the best buildings on the street, Savills said.”I had this asset under offer after Lehman Brothers,” Mr Down said. “I was buying it for a price reflecting a yield of 7 per cent then. That was a proper crisis, this is just a confidence issue about the economy in the short term.” That deal was not completed after British Land decided against selling the property.business@thenational.aeFollow The National’s Business section on Twitter
Source : thenational.ae
Read more…Brexit takes a bite out of quick-sale London property prices
