BlackRock responds to shrinking market liquidity by tightening its withdrawal processes on its property funds.
BlackRock has amended the withdrawal process for unit holders of its Direct Property Fund, Direct Real Estate Fund and Combined Property Income Fund, to better manage the liquidity of these offerings.
In regard to the two direct property funds, the processing and payment of withdrawal requests will now be at the discretion of the fund manager and may take up to 18 months.
"How it will work is when we deem we have enough cash on hand from just managing the fund, we will start to pay out the redemptions that have built up and that...may be up to 18 months," BlackRock managing director Maurice O'Shannessy said.
Apart from this change the funds will continue to be managed in the same way as before, he said.
"One of the reasons for doing this is to make sure we are still managing the funds in an orderly fashion. The underlying assets are very sound. Both funds feed into an underlying property fund that holds 26 properties which are 99 per cent leased, with a lease expiry of 4.2 years," O'Shannessy said.
While the cash position would be managed carefully, the process will not prevent the funds from acquiring assets BlackRock finds to be of value.
In reference to the Combined Property Income Fund, investors will not be able to redeem their units unless BlackRock makes a withdrawal offer to do so.
"We will be making withdrawal offers...for that fund, and again it will be in line with various decisions on portfolio weights, and as we obtain some liquidity," O'Shannessy said.
Based on the strength of underlying assets and that distributions and daily unit pricing were still in operation, there was no need for existing investors to be concerned, he said.
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