3 U.K property funds halt redemptions after Brexit vote prompts wave of sellers

Three British property fund firms have temporarily banned unit holders from selling their stakes amid a sudden wave of interest in dumping real estate holdings following the Brexit vote.

On Tuesday, Standard Life and Aviva both halted redemptions in their U.K.-focused property funds, which are pooled investments that hold real estate, similar to a REIT. Later in the day,M&G Investments joined them.

"Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the U.K. commercial property market since the outcome of the European Union referendum," M&G said on its website. "Redemptions have now reached a point where M&G believes it can best protect the interests of the funds' shareholders by seeking a temporary suspension in trading."

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In practical terms, that means all three funds are seeing a surge of investors in their real estate funds who want their money back. The funds typically keep a small portion of their holdings in cash or other liquid investment in order to pay bills like that. But a surge of redemptions since the Brexit vote has them without enough cash on hand to pay out investors pulling out, since most of the fund's money is tied up in British real estate.

Virtually all British asset classes, from the pound, to stocks, and real estate, has seen theirvalue plummet since the "Leave" side unexpectedly won last month's vote to leave the European Union. That's plunged the British economy into uncertainty, since the true economic toll of the move is impossible to fully and fairly calculate over the long run.

British real estate was a favourite of international investors for its long-term stability. But at least in the short term, after the Brexit vote, it's no longer proving to be quite as valuable.

Just last week, Standard Life marked down the value of its British real estate holdings in reaction to the shocking Brexitnews.

The Bank of England has cited the commercial real estate market as one of the risks to the British economy. It says the sector has taken in capital from overseas and had become "stretched."

"The extraordinary market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity in the Aviva Investors Property trust," Aviva said.