Aviva approached by potential buyers for frozen Irish property assets

Aviva has been approached by investors interested in assets held by one of its frozen Irish property funds, according to sources.

Aviva's Friends First Irish Commercial Property Fund already had two properties at various stages of the sales process before it halted withdrawals, the company had said. It may sell another this year to finance investment in other real estate it owns, the people said.

None of the proposed deals for properties progressed beyond initial contacts, said the people, who asked not to be identified as the information is private.

An Aviva spokeswoman declined to comment.

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Aviva last month halted withdrawals from the Friends First fund and its Aviva Irish Property Fund, which had combined assets under management of about €940 million, in January. The move sparked concerns about the potential for wider problems in the sector.

Before locking the funds, Aviva switched the funds’ pricing to a disposal basis which pushed down their value by just over 9 per cent in both cases. The change indicates an intention to sell property at some point, though Aviva at the time said the Friends First fund had no plans to sell property “due to liquidity concerns.”

Irish property funds run by Zurich Insurance Group and Great-West Lifeco's Irish Life unit also moving to disposal pricing amid an outflow of funds.

Moratorium

Redemption requests at the Aviva funds have slowed since the moratorium and pricing change, the people said.

If redemptions remain at current levels, the funds aren’t expected to remain frozen on a long term basis, they added. More than 90 per cent of the redemptions have been requests to switch investments from the property funds to other asset classes rather than complete withdrawals.

About 40 per cent of the Friends First fund is invested in retail properties, mostly in Dublin. Apart from three business parks, the fund owns one retail asset in Cork. – Bloomberg