AVVIY Aviva PLC (PK)

Some U.K. real-estate funds have started thawing out after the post-Brexit freeze.

Asset manager Columbia Threadneedle Investments on Monday said its U.K. property fund would reopen later this month. The London-based firm had shut down trading in early July when investors were rushing to pull their money out after Britain voted to leave the European Union.

Earlier this month, asset management firm Canada Life lifted the suspension of redemptions on its U.K. real-estate fund. And U.K. fund manager Aberdeen Asset Management PLC reopened its property fund in mid-July, having taken a slightly different approach after Brexit, suspending its fund for a short time and charging a steep fee if an investor still insisted on pulling money out.

Some of the biggest U.K. property funds remain shut, including those at Standard Life Investments Ltd., Aviva Investors and M&G Investments. In August, Aviva told investors it wouldn't reopen its fund for at least another six months.

But the reopening of even a few funds signals that investors' concerns about the impact on U.K. property market have eased since the EU referendum in late June, when the property market was hit hard. In addition to funds suspending trade, shares of listed landlords sank, deals collapsed, and completed sales were done at a discount.

So far, the market has held up better than some property experts had expected. The discounts on sales haven't been as big as they were in previous market downturns. Shares have rebounded.

The stability has been reason enough for some asset managers to resume business.

"Any effects of the Brexit vote on the overall U.K. economy, negative or otherwise, will take many months if not years to transpire, and sometime after that for the property market," said Don Jordison, managing director of property at Columbia Threadneedle Investments, in a prepared statement.

Open-ended funds have been popular with investors because they offer real-estate returns without the volatility that comes with owning the shares of listed real-estate companies. A fund's price is based on monthly appraisals of the property owned by the fund.

Yet these funds often face criticism over their structure: they promise investors the ability to withdraw their money daily even though property assets like office buildings or shopping malls can take months to sell.

This has proved problematic in times of market stress. After Brexit, asset managers decided to freeze their property funds to sell property.

Aberdeen reopened after setting up new procedures for pricing redeemed units. If investors wanted to take money out, they needed to pay a 17% fee. During that period, the firm sold properties, often at steep discounts, to fund redemptions.

The exit fee at Aberdeen has since been reduced to 5%. Columbia Threadneedle sold, or agreed to sell, 25 properties for £ 167 million ($221.5 million) since July, it said. On average, the sale prices were 1% less than the valuation before Brexit.

At the time of the suspension, Columbia Threadneedle's fund had been worth £ 1.3 billion. The property fund will reopen for trading on Sept. 26 without redemption penalties, it said.

Elizabeth Pfeuti also contributed to this article

Write to Art Patnaude at art.patnaude@wsj.com

(END) Dow Jones Newswires

September 12, 2016 09:45 ET (13:45 GMT)

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