Brandeaux is most widely known for its funds investing in student accommodation and its British Virgin Island-domiciled Brandeaux Student Accommodation Fund had almost £1bn invested in it as at the end of May.
Explaining the fund’s suspension in a note accompanying the letter to investors, Brandeaux said there is a “great deal of uncertainty” in the student accommodation market, “created by over £2bn of student accommodation property in the market”. The note added this has caused a “considerable ‘overhang’ which accounts for over 20% of all privately owned UK purpose built student accommodation property”.
Brandeaux said it is currently in discussions “on various property transactions to create liquidity”.
The company also manages a series of “Ground Rent Portfolio” funds domiciled in both the BVI and Isle of Man which together amount to more than £490m.
In its update, Brandeaux said it is in the process of selling a number of sub property portfolios totalling approximately 80% of the value of the portfolio “due to the continuing demand for liquidity from shareholders and their underlying investors”. Brandeaux added it is “optimistic the transactions will complete”.
In addition to the two portfolios mentioned above, Brandeaux also manages the “Dual Assets” funds which invest in the student accommodation funds and ground rent funds so are impacted directly by the same market forces.
In an email sent to advisers and investors today, chairman Kay Brandeaux and chief executive Roger Boyland said they have taken the “difficult decision” to suspend its entire eight-strong fund range, but moved to reassure investors telling them not to “panic”.
The email said: “There is no basis for investors to ‘panic or to worry that they have ‘lost all their money’. All Brandeaux funds remain completely solvent and can meet all of their operational cash needs.”
In the accompanying note, Brandeaux moved to downplay the role of market forces in its decision, blaming, in part, recent pressure from the UK’s Financial Conduct Authority on IFAs not to sell non FCA regulated funds.
The statement said: “One example of these challenges continues to be the impact of PRA and FCA regulatory initiatives aimed at discouraging IFAs from marketing non PRA and FCA regulated funds. The directors believe that this, together with other factors, including the continuing global uncertainty has led to the recent increase in redemption requests and fewer subscriptions received by the Brandeaux funds."
The full list of suspended funds are:
- Brandeaux Student Accommodation Fund (Sterling) Limited
- Brandeaux Student Accommodation Fund (Multi Currency) Limited
- Ground Rent Income Fund Limited
- The Ground Rent Portfolio Limited
- Ground Rent Portfolio Plus Limited
- Brandeaux Dual Asset Fund (Sterling) Limited
- Brandeaux Dual Asset Fund (US Dollars) Limited
- Brandeaux Dual Asset Fund (Euro) Limited
