Tilney’s British Real Estate fund goes bust

Tilney Asset Management’s Guernsey-domiciled £79.5m British Real Estate fund has gone bust and administrators PricewaterhouseCoopers (PwC) says there is little prospect of returns for shareholders.

PwC is writing to the fund’s 275 shareholders, which are made up of private, retail and institutional investors, including pension funds.

Partner David Chubb says: “Given the level of the debt, it looks very unlikely there will be any distribution to shareholders.”

In January 2009, Money Marketing, Fundweb’s sister publication, revealed the fund fell by over 70% in the 12 months to November 30, 2008.

In March 2009, the fund’s directors suspended the calculation of its net asset value because they considered they could not accurately determine the value of the assets. This prevented subscription and redemption requests being made.

In March 2010, shareholders approved a resolution to extend the maximum suspension period of the valuation of the NAV and redemptions of participating shares from 12 months to 24 months to allow further time to explore restructuring options.

The loan-to-value ratio on the geared commercial property fund at December 30, 2010, was 109.1%, compared with 99.3% in December 2009.

In December 2010, chairman Robert L Court wrote in the fund’s annual report: “The fund was affected by the downward valuation of property values in the secondary sector and, as a result of its gearing, the share price performance has suffered considerably more than other funds.”

Deutsche Bank, which owns Tilney Asset Management, declined to comment.

Simon Moore, senior research analyst at Bestinvest, says: “There are higher income returns from geared funds but this amplifies the downside.”