Brandeaux investors begin receiving payouts

Investors in the Brandeaux Student Accommodation fund have begun receiving payouts after it sold its portfolio, bringing to an end a wait of almost two years during which their money was trapped in the fund.

The unregulated open-ended fund was gated in 2013 after it was unable to sell properties to meet redemption requests, but in March sold its Liberty Living portfolio for £1.1bn to the Canada Pension Plan Investment Board.

The fund began paying investors 95 per cent of the value of their holdings after that, and is now processing another compulsory redemption of four per cent, with the remaining one per cent expected later in the year.

However, the payouts follow a series of writedowns to the fund's net asset value, which has fallen by 11 per cent since August 2013.

The fund's management said the latest writedown reflected "transaction costs incurred in providing liquidity and an estimated amount for the costs of winding up the fund".

The Brandeaux fund was the largest of a series of student accommodation funds to suspend redemptions shortly after the City regulator banned sales of unregulated funds to most investors.

Tobias Haynes of Regulatory Legal, a law firm which has been acting on behalf of a series of Brandeaux investors, said the payouts showed "that there can be some hope in these sorts of investments - things can pull through".

"But that doesn't remove the anxiety caused to people, and if they had known exactly what they were investing in, that would never have been necessary," he added.

Regulatory Legal had been seeking payouts from the Financial Ombudsman Service for investors in the fund on the basis that major advice networks had mis-sold it as low to medium risk.

The law firm also said some investors had not understood the structure of the fund, such as its use of loans and mortgages.

An attempt to float Liberty Living as a real estate investment trust (Reit) collapsed in June 2014.

The £250m Mansion Student Accommodation fund suspended redemptions in 2013, and late last year urged shareholders to support liquidation of the fund.

Two other student property funds, Braemar and Opal, have also suspended payouts to investors.

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