Investment | The Bank of Åland’s housing fund postpones the payment date for redemptions

The business director of the Bank of Åland’s fund company says that redemption requests from Finland’s second largest housing fund have increased strongly in the fall.

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Housing trade the problems caused by the deadlock spread more and more to Finnish housing funds, when the funds are not allowed to sell their apartments in order to pay redemptions to the fund owners.

Finland’s second largest housing fund, the Åland Bank’s housing fund, said on Monday that it will move the payment date for redemptions from October to a later date due to the long sale times of the apartments.

The housing fund will pay redemptions to its fund owners next time, in accordance with the fund’s rules, on the next redemption day from the moment when it has sufficient cash to pay the redemptions, says the housing fund’s portfolio manager, business director of the Ålandsbanken’s fund company Pasi Huhtakangas.

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The fund has redemption dates four times a year, always at the end of the quarter, which means that in practice, the payment date for redemptions moves at least three months from October to the end of the year. The payment date for redemptions is a few days after the redemption date.

The transfer of the payment date applies to redemptions made from the fund during the redemption window of the third quarter, i.e. May–July, and during the additional redemption window in early autumn. An extra redemption window opened for the fund because it changed its rules in August.

HS told earlier in Septemberthat several Finnish housing funds have changed their rules during the summer and autumn in such a way that it is more difficult for fund owners to withdraw their funds from the funds in question.

All three large housing funds have changed their rules, which in addition to the Åland Bank’s housing fund, OP’s Vuokratuotto and S-Pank’s housing fund have changed.

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Bank of Åland according to the current housing market situation, the payment of redemptions takes longer than usual. The bank firmly believes in the fund’s ability to function in the future and says that transferring redemptions is the best option in terms of the interest of the fund’s unit owners in this market environment.

Since the beginning of the year, more redemptions have been made from the Bank of Åland’s housing fund than new subscriptions have been made to it.

“Since the redemptions have continued strong for a longer time, the fund has not been able to fully react to the redemptions by selling assets due to the extended sale times of the housing market,” says Huhtakangas.

Huhtakangas says that “for a while” it seemed that the number of redemptions would stop, but they turned to a strong rise in the fall.

Redemption requests were made from the fund for approximately 80 million euros to be paid in October. It is a lot compared to the fact that before that, during the beginning of the year, the fund paid out redemptions net of around 70 million euros.

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“The number of redemptions that have come in the redemption window of the third quarter is so great that the fund’s liquid assets are not enough to cover it,” says Huhtakangas.

According to the fund report prepared by Finland’s investment research, the capital of the Bank of Åland’s housing fund was more than half a billion euros at the end of August. Finland’s largest housing fund is OP’s Vuokratuotto, whose capital rises to around 1.4 billion euros.

Correction 9/26/2023 at 4:05 p.m.: Contrary to what was written earlier in the text, Pasi Huhtakangas is not the business director of Ålandsbanken, but the business director of Ålandsbanken Rahastoyhtiö.

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