The Bank of England was warned of the possibility that commercial property funds may be suspended because of the rate of withdrawals prompted by the Brexit vote.
Documents released by Threadneedle Street show that policymakers were told in meetings on 28 June and 1 July of the outflows from funds investing in commercial property.
These funds usually offer instant access to cash but as they are invested in properties such as office blocks and warehouses, their assets are hard to sell quickly. Since 4 July, seven funds have taken steps to either stop withdrawals by suspending trading or reducing the fund’s value. Aberdeen Asset Management is cutting the value of its fund by 17%, the largest reduction yet.
The record of the meeting of the financial policy committee (FPC) – established to look for risks in the financial system – shows that the City regulator, the Financial Conduct Authority (FCA), had issued a briefing on commercial property funds.
