Legal & General makes a further 10% cut in its property fund following Brexit vote

Legal & General's fund arm and F&C Investments both cut the value of their UK property funds as gloom in the industry spreads following the UK's Brexit vote.

Legal & General Investment Management (LIGM) said it cut has the value of its £2.3bn UK property fund by 10%, after a previous 5% cut in the fund.

"At this time it is still difficult to predict the exact impact of the vote to leave and subsequent market events on commercial property values," LGIM said.

Several UK property funds have suspended trading or cut valuations as the industry seeks to stem a tide of redemption requests, following Britain's vote to leave the European Union.

F&C, part of the fund arm of Bank of Montreal, said it had cut the value of its £305m UK Property Fund by 5% as part of a move to fair value pricing.

It said: "The level of redemption requests we have recently received and market conditions suggest that investors may place further redemptions; leading to downward pressure on realisable property values."

More than half the UK's commercial property funds market is under suspension, after a number of investment managers have placed their respective units on ice. Canada Life and Columbia Threadneedle announced on Wednesday (6 July) that they would be suspending trading in their property funds following an increase in capital withdrawal demands by panicking investors.

Earlier in the day, Henderson Global Investors also succumbed to market pressure and reversed its stance of not going down the trading suspension route. These moves follow market leader Standard Life's decision to suspend trading in its £2.9bn fund on Tuesday (5 July), with Aviva and M&G Investments doing likewise.

Worryingly, headline valuations of funds in suspension so far suggests over half of the UK's £25bn commercial property funds market is currently inaccessible to investors.