Investors trapped in property funds suspended by Brandeaux last week have had to wait more than two years, in some cases, to exit the embattled vehicles.
Last week, Investment Week revealed Brandeaux had suspended redemptions on its £1bn Student Accommodation fund as liquidity dried up.
The group later announced it was suspending its entire eight-strong fund range and admitted that up to 80% of property in its £372m Ground Rent Income fund is up for sale.
Now it has emerged Brandeaux has advised some clients it has a logjam of redemption requests queued back to April 2011 in some funds, according to documents seen by Investment Week.
This 27-month queue has built up around the Brandeaux Dual Assets fund sterling share class, which relies on the liquidity of the two underlying funds it feeds: the Student Accommodation and Ground Rent Income funds.
Brandeaux runs a variety of currency-hedged share class vehicles, all domiciled in the British Virgin Islands but accessible to UK investors via the Dublin stock exchange.
The Dual Assets fund dollar share class has a redemption queue dating back to July 2011, while some investors in the fund's euro share class have been trapped since October 2011.
Brandeaux confirmed some investors in the Ground Rent funds have had their redemption requests delayed since 2011, in accordance with powers granted under each fund's constitution.
The group said that achieving liquidity through the sale of property has been challenging due to severe illiquidity in the market, but some sales have been achieved and some redemption requests met.
An investor, who asked not to be named, described the decision to formally suspend the fund two years after it was unable to meet some redemptions as "shocking".
"I find the situation shocking and obviously they have been more keen on taking fees than looking after investors," she said. "Funds should have been suspended as soon as they could not realistically meet redemptions, which was over a year ago."
Paul Stocks, financial services director at Dobson & Hodge, has a client who came to him with an existing investment in the Brandeaux Dual Assets fund. He has been trying to redeem the investment since June 2012.
"I do not think the client understood what he had [bought]. Having discussed with him the nature of the investment, he decided he wanted to sell out, and that was in June last year," Stocks said.
Hilary Wakefield, director and head of UK portfolio management at EFG Asset Management, has positions in the Dual Assets fund and he questioned the method used to value the fund's underlying property holdings.
"If the property was valued on a mark to market basis... They would not have achieved the consistency of returns that has been achieved to date," he said, adding the funds have paid out an annual 9.5%-10.6% over the last few years.
"One must question how they have managed to achieve these returns through two economic downturns including a major credit crunch where the wider property market in the UK collapsed 27%.
"A further worry is that it is often difficult to access up to date information on the company's activities, and that concerns us."
In response, Brandeaux said its funds' underlying property assets are valued monthly by independent third party professional valuers - Cluttons for the ground rents properties, and Savills for the student accommodation properties.
It said the group does not rely on internal property valuations and all property sold so far has been made at or above these third-party valuations, adding investors can see monthly fund factsheets on the Brandeaux website.
EFG AM's Wakefield also said he felt Brandeaux had failed to anticipate the changes in the market and the potential impact on their funds.
These changes include upcoming tighter restrictions on the sale and promotion of unregulated collective investments (UCIS) which has seen IFAs and pensions funds rush to sell out of such products.
"Brandeaux's model and structure is 13 years old and the market has moved on. It seems like they have not kept up and are now facing widespread redemption demands," he said.
Brandeaux said it will continue to explore all options for preserving liquidity within the funds.
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