Tracking frozen funds in Australasia

September 7, 2010

This list tracks the avalanche of Australasian investment funds that either collapsed or suspended redemptions due to the global credit crisis.

Absolute Capital: one of the first to collapse in November 2007 courtesy of exposure to the US sub-prime market.

AMP: froze withdrawals from its Capital New Zealand Property Fund in August 2008 after contagion engulfed the entire sector. In March 2008, all of the assets in the Property Fund were acquired by the AMP Capital Property Portfolio (APP). This fund is New Zealand's largest unlisted property fund. They also froze a $1.4 billion Australian fund which supported allocated pensions for ING's OneAnswer platform.

APN Funds Managment: in October 2008 they announced a suspension of their funds due to the unprecedented decline in the value of the listed Real Estate Investment Trusts and surge in redemptions. The APN Property for Income Fund re-opened on December 21, 2009.

AXA: The French controlled insurance giant suspended redemptions by institutional investors from its Kiwi Mortgage Backed Bonds fund in August 2008 and has also frozen its $1 billion Wholesale Australian Property Fund. As of November 28, 2008 which is the most recent announcement, the fund will introduce a new withdrawal regime. AXA will notify clients of any withdrawal offers and income distributions from WAPF will continue to be paid quarterly.

Basis Capital: The investors had funds in high-yield corporate and structured credit securities, including mortgage-backed bonds and collateralised-debt obligations that plunged value when the US housing crisis struck. On November 27, 2009 announcements were made for both the Basis Aust-Rim Opportunity Fund which was being wound up, and the Basis Yield Fund which was liquidated.

Becton Office Fund: Redemptions from the BDPF are currently suspended. After inception in 2003, the last update was on December 31, 2009.

Becton Office Fund: in April 2014, the Fund will be wound up and the proceeds after repayment of all loans and other costs will be distributed to Investors. Investors may by a majority vote, agree to reduce or extend the Term. The term will not exceed five years.

Becton Retail Fund: in February 2014, the Fund will be wound up and the proceeds after repayment of all loans and other costs will be distributed to Investors. Investors may by a majority vote, agree to reduce or extend the Term.

Blackrock Australia: in August 2008 revealed that only periodic withdrawal offers would be accepted at its $600 million Combined Property Income fund. Two other Blackrock funds, Direct Property and Direct Real Estate, are also forcing clients to wait up to 18 months for redemptions.

BT Investment Management: froze redemptions from its $1.3 billion Global Return Fund in late 2008 after a flood of redemption requests. On April 21, 2009 they decided to terminate the fund after the fund manager failed to find a solution to the redemptions freeze.

Canterbury Mortgage Trust: a $250 million New Zealand fund which froze redemptions in July 2008. On February 13, 2009 a decision was reached where the Canterbury Mortgage Trust fund was to be wound up. The winding up process is expected to take up to 3 years and payments will be made on a quarterly basis.

Centro: froze redemptions on its open-ended unlisted Centro Direct Property Fund in December 2007. As of November 2009, an announcement was made stating that the fund remains frozen and will remain this way for the next 6 to 12 months. The fund was established in 2002 and provided investors with exposures to Australian shopping centres through CentroMCS syndicates.

Challenger: froze its Hybrid Property Fund in late 2008. In September 2009 they announced that until market conditions have stabilised, and there is sufficient liquidity in the Fund, they expect to be able to reopen the fund for investments and withdrawals, but they cannot say when that may be.

Challenger Howard Mortgage Fund: froze redemptions in its $2.9 billion Howard Mortgage Fund, Australia's largest, after a run caused by the government's blanket guarantee on all deposits. They have since announced withdrawals opened from 24 July 2009 until 21 August 2009, but only a maximum of 5% was allowed out to keep the fund liquid. They say they are still actively invested in a well diversified pool of around 2,300 mortgages.

City Pacific: froze redemptions on its $1 billion First Mortgage Fund in March 2008 after bad publicity generated a flood of requests. Distributions were also abandoned and the freeze has been extended until 12 months. City Pacific has since collapsed and in July 2009, Trilogy Funds Management and Balmain Corp snared control of the fund which at its peak in 2005 was worth around $890m, and in early 2010 was worth around $520 million. In January 2010 the CBA announed they were extending an $80 loan facility to the fund.

Cromwell Group: the Brisbane-based property player froze redemptions at its $472 million unlisted Cromwell Property Fund in January 2009, blaming crashing property prices for making unit pricing too difficult, as The Australian reports. On August 3, 2009 they announced they were suspending the payment of distributions, apart from holders who could prove real hardship, to deal with funding pressures. On December 22, 2009 they received an extension of relief from meeting its loan to valuation ratio covenant on its main loan facility until 31 January 2010.

DWS: temporarily froze redemptions at its Strategic Value hedge fund in early 2009 after a flood or redemption requests following the Madoff scandal, but it was re-opened on November 26, 2009.

Guardian Mortgage Fund: the $249 million New Zealand Guardian Mortgage Fund froze redemptions in July after a run. In February 2009 it was voted that the fund would be wound up, and as of January 2010, Guardian Trust has repaid 45% of investors capital from the Fund.

HFA: this outfit was spun out of MFS in 2006 and ended up freezing $5.6 billion in four different funds just before Christmas in 2008, as this Herald Sun story explains. Things had settled down by late 2009 and after some de-leveraging and an extension on an existing loan facility, funds were open but the overall value of funds under management had decreased 29% when compared to the same time in 2008.

ING: froze its allocated pension produce sold through the OneAnswer platform after an underlying $1.4 billion AMP was itself locked up for a year. See The Australian's report. In January 2009 they were open.

Macquarie Group: froze redemptions on its $1 billion Direct Property Fund and Direct Wholesale Property Fund on August 25, 2009 and then further angered investors by closing all Macquarie Equinox hedge funds in this announcement on November 28, 2009. On February 12, 2010 an announcement was made stating that the Macquarie Direct Property Fund will now be managed by Charter Hall Group of which Macquarie is now a major shareholder.

MFS/Octaviar: the $700 million MFS Premium Income Fund was frozen in January 2008 after a major run and has since collapsed.

Mirvac: on July 25, 2008, Mirvac announced a 6 month freeze on redemptions at three funds - Mirvac AQUA High Income Fund, Mirvac AQUA Enhanced Income Fund, and the Mirvac AQUA Income Fund. They were again open by July 1, 2009.

Orchard: since July 2008, all of their unlisted property funds have been closed due to the "enduring market conditions". As of September 2010 there has been no news as when the funds will re-open.

Shakespeare Haney: the Premium Income Fund has total assets, at December 31, 2009, of $164m, down from $226m at June 30, 2009. By Septenber 2010 the fund had re-opened.

Tankstream Property Investments
: a boutique property fund manager, suspended application to, and redemptions from, the $30 million Tankstream Property Investments Fund. In August 2009 they announced a merger with Pelorus Property Group funds management business.

Tower: closed its $242 million Mortgage Plus fund in New Zealand after a run in the first half of 2008.

Trinity Property Trust: froze its $500 million property trust in mid-2009 and even the Queensland Labor Party has an estimated $2 million locked up inside it.

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