Investors in two Aviva Life and Pensions commercial property funds have been told they cannot withdraw their money for six months because of recent net outflows.
However, new customers will still be able to invest money into the Aviva Irish Property Fund and the Friends First Irish Commercial Property Fund, which have a combined valuation of €939m.
In a statement, Aviva Life and Pensions Ireland said it has a responsibility to treat all policy holders fairly and equitably in such circumstances.
"Due to recent net outflows from the Aviva Irish Property Fund and the Friends First Irish Commercial Property Fund, we have taken the decision to close both funds to all out-going transactions, including surrenders, and switches," it said.
"From the date of the receipt of the request from the policyholder, together with all relevant requirements, the moratorium will defer processing redemption instructions from the Funds for up to six months."
"This change will impact any redemption requests received after close of business on 30th January 2020."
It is the first time since the financial crisis that Aviva has restricted withdrawals from funds in this way.
The company has also decided to change the status of the Aviva Property Fund from an acquisition to disposal basis.
This technical change means that the value of the €376m fund has been revalued downwards by 9.3%.
The change will impact any request from investors for the return of their money made since Wednesday.
"The change has been made in order to ensure equity between investors leaving the Fund and those who remain invested," Aviva said.
"If the adjustment was not made, then in the event of the Fund having to dispose of assets, the cost of those disposals would only affect the value for investors remaining in the Fund."
It follows a similar move by Aviva Life and Pensions over the €563m Friends First Irish Property Fund, resulting in a reduction of 9.1% in the value of the fund.
"Our view is that the fundamentals of the Irish commercial property market remain strong," said Suzie Nolan, Senior Property Fund Manager, Aviva Life & Pensions Ireland DAC.
"The properties in the fund are actively managed by an in-house team, the Irish economy continues to perform well, unemployment is at a 13-year low of 4.8% and the demand for good-quality commercial property remains strong from both occupiers and investors."
"This change in pricing is not as a result of deteriorating fund or market performance".
Aviva added that its Irish Property Fund is currently "well positioned", with its core, Dublin-centric portolio of holdings, low vacancy rate and higher than average unexpired lease terms.
It added that it delivered a gross return of 5.15% last year.
The Friends First Irish Commercial Property Fund is also performing well, Aviva claimed, leading the Irish property unit linked peer group for last year and on a three year rolling basis.
It generated a return of 8.7% last year.
Separately, Irish Life has also reduced the valuation of its Irish Property Fund by 7% as a result of its redesignation to a disposal basis.
That fund was valued at €834m at the end of December last year, with 83.7% of that value tied up in Irish retail, office and industrial properties and the remaining 16.3% in cash.
Its annual returns had fallen from 30% in 2014 to 3% at the end of 2019.
"The pricing basis of property funds can change from time to time and that can lead to once off price movements as we have seen this week," an Irish Life spokesperson said.
"However, the Irish property investment market remains very strong with €7.2 billion of transactions completing in 2019 with continued interest from international investors who accounted for over 70% of investment volume in 2019 representing a strong endorsement of the Irish property market."
It added that the outlook for the Irish property market this year remains positive.
Neither Aviva nor Irish Life have plans to selling properties in the portfolios due to liquidity concerns.
This evening Zurich also confirmed that it has moved the pricing of its property fund from an "acquisition" to a "disposal" basis, due to an increase in net outflows from the fund.
As a result of this the value of the Zurich Property Fund has decreased by 7.7%.
The fund primarily invests in a commercial property trust, which currently invests in offices, retail, industrial and other assets in Ireland, the UK and Europe.
It will also invest in property related securities and cash instruments.
80% of the fund is made up of property, with the balance in cash.