Placement|The OP management company temporarily suspended redemptions of the fund units of its two real estate funds at the turn of the year. The clients of the management company interviewed by HS regret the decision.
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The OP management company suspended the redemptions and subscriptions of its two real estate funds.
The decision applies to the OP-Serviced Property and OP-Vuokratuotto funds.
Customers cannot get their money out, even though they have made a redemption request.
Real estate funds following the yield development may have seemed painful lately. Because of Alho, which prevails in the Finnish housing market, funds the returns have remained rather modest.
In this situation, one or another small investor may have considered whether it would be worthwhile to just sell their fund share and invest the freed up money elsewhere.
However, this opportunity was lost at the turn of the year for OP management company’s customers.
Company announced on Tuesday to temporarily suspend the redemptions and subscriptions of the fund units of its two real estate funds. The decision applies to the OP-Serviced Properties and OP-Vuokratuotto funds. The company did not say how long the closing of the funds will last.
The restriction does not only apply to those customers who have considered exchanging their ownership for money. The restriction also applies to those who have already made a redemption request. So far, no one who has made a redemption request after the beginning of July last year can get their money out.
OP management company’s customers have been upset by the announcement, according to the survey sent to them by HS.
More the client of the management company tells HS that he made a redemption request towards the end of last year. The money would have been better used this year, they say.
“In October, I submitted a redemption request to the Rental Income Fund for my entire investment. I would have paid off my mortgage with it,” says the 62-year-old woman.
None of the customers of the OP management company interviewed by HS wanted to comment on the company’s decision in their own name. The interviewees appealed to the fact that talking about money matters in public feels too personal. The identities of the interviewees are known to the editor.
“I bought an apartment a few years ago. At that time, I didn’t want to do the redemption yet, because I thought I could pay off the mortgage anyway. Loan interest rates have increased since then, and I wouldn’t mind paying them when I could pay off the entire loan at once,” the 62-year-old woman continues.
He worries about whether he will still manage to cancel the redemption request.
“I would have used the money this year, but I may not need it anymore when the fund opens. By then, I may have already paid off my loan.”
Real estate funds closing for a fixed period of time is not exceptional in itself.
By limiting redemptions, fund companies try to prevent real estate from being forced to sell at a ridiculous price in order to get cash to cover redemptions for those who withdraw their money from the fund.
A mass exodus of investors could also start a cycle of falling prices in the real estate market.
OP management company has justified the temporary closure of the funds with the desire to “protect the interests of unitholders”.
“By suspending assignments, we ensure that the fund does not have to sell its high-quality real estate investments in a stagnant market at a price significantly lower than the fair market value, which would not be in the interest of unit owners,” the company said in its press release.
HS:n to the survey the 44-year-old woman who answered says that she basically understands the OP management company’s decision.
“I do understand their point of view. In terms of the company’s real estate investments, closing the fund for a limited period is certainly the right solution.”
At the same time, however, it saddens him that the redemption request he made in July will not come true.
“I kept my money in the OP-Vuokratuotto fund. I would have had a real need to redeem the fund share.”
Nainen points out that the fund’s rules were already strict regarding how often redemptions could be made at all.
“You could submit a redemption request to the fund twice a year. After making the redemption request, you had to wait about a year until the money was released. So I expected that I would receive the redemption I made in July in my account in June-July of this year.”
A woman who managed her grandmother’s estate also responded to HS’s survey. The woman herself is not a client of the OP management company, but her late grandmother was. The woman says that she also made a redemption request in July, so that the funds in the grandmother’s fund could be distributed.
“Now there is no information when money can be withdrawn from the fund again. The expenses of the estate, on the other hand, run all the time.”
OP-Rental income is Finland’s largest fund that mainly invests in apartments. The fund’s portfolio includes approximately 5,400 directly owned residential apartments and 21 office premises.
The value of the fund is approximately EUR 1.1 billion, and it has more than 38,000 unit owners. The profit share for the year is 8.42 percent at zero.
On the other hand, OP-Palvelukinteistö has 55 properties. Its annual return is 1.17 percent at a loss. There are about 13,000 unit owners in OP-Palvelukiinteistö.
In July–December, redemption notifications were made to OP-Rental income for approximately EUR 60 million and to OP-Serviced property for approximately EUR 13 million.
The OP management company will now pay the redemptions made in the first half of last year in January.
From January to June 2024, redemptions were made from OP-Rental income in the amount of 87 million euros and from OP-Serviced properties in the amount of approximately 20 million euros.
In addition to the OP management company, also several other Finnish real estate funds have since 2023 tightened their rules regarding redemptions.