London Life expects that it will be able to process payments to unitholders of its real estate fund on Dec. 4, 2009. Payments will be made using the unit value on that day. The temporary suspension of withdrawals and transfers has been in force since Dec. 15, 2008. Despite the payments expected in December, the insurer is still not in a position to determine how much longer the suspension will last.
Clients may still make a request for a payment or a transfer. In a message sent to advisors by the Canada Life distribution team in September, the company explained that if the total of all demands exceed the amount of cash available in the funds, payments will be made on a proportional basis.
Amounts that cannot be paid will be carried forward to the next payout date, which is unknown at the moment. This date will depend on the amount required to meet outstanding requests, and the amount of time necessary to increase cash.
As of Aug. 31, 2009, the distribution team says the London Life Real Estate Fund held $165 million in cash, which represents 10.5% of the fund’s net asset value.
"Even if London Life is able to fully meet all its Real Estate Fund redemption requests, the temporary suspension may still need to remain in place until the Fund’s cash position is sufficient to process withdrawals and transfers on a daily basis," reads the message sent on behalf of Rick Rausch, Senior Vice President, Individual Retirement and Investment Services, and Phil Marsillo, Senior Vice President, Individual Distribution.
The Great-West Life Real Estate Fund, in which the Canada Life Real Estate Fund is invested, has also imposed a temporary suspension on redemptions and transfers. However, unitholders of this fund should not expect their requests for withdrawals to be paid anytime soon.
The distribution team says that the fund held $92 million in cash as of Aug. 31, 2009, which represents 3% of net assets.
GWL Realty Advisors, which manage these real estate funds, will continue to focus on building cash so that the suspension can be lifted. Nevertheless, the message notes that "there are fewer buyers for large, commercial properties in this economic environment and transactions take longer to complete".