Temporary closure

St James’s Place latest to suspend property funds

Property investment ‘too volatile’

St James’s Place has joined a number of asset managers and suspended dealings in its UK commercial property funds over volatility in the market caused by the coronavirus pandemic.

It will apply to the £1.1bn St James’s Place Property Unit Trust, the £1.3bn Property Life fund and the £1.2bn Property Pension fund.

Columbia Threadneedle, BMO Global Asset Management, Legal and General Investment Management, Aberdeen Standard Investments, Kames Capital and Janus Henderson have already suspended their open-ended UK property vehicles.

A spokesman for SJP, which has offices in Melville Street, Edinburgh, said: “Property fund valuers across the market, including our independent valuer CBRE, are currently unable to accurately or fairly value the properties within our property funds.

“The inability to accurately price property funds is a challenge for the entire property investment sector at present, rather than St James’s Place funds in isolation.

Association of Real Estate Funds managing director Paul Richards says: “Investing in UK property is an investment in hotels, offices, shops, warehouses, and restaurants up and down the country. Covid-19 is causing great economic uncertainty, hitting all of these businesses, and also reducing the number of investment transactions which provide evidence for property valuations.

“This means that valuers can no longer assess the value of properties with a high degree of certainty.

“Under these conditions property funds need to suspend while this extraordinary situation lasts, in order to ensure that investors, mostly long-term pension savers, are protected.”

The Financial Conduct Authority said in a statement: “The FCA understands that certain standing independent valuers have determined that there is currently material uncertainty over the value of commercial real estate.

“In such situations, a fair and reasonable valuation of CRE funds cannot be established. As a result, some managers of open-ended CRE funds have temporarily suspended dealing in units of these funds and others are likely to follow for the same reason.”

“Suspensions can be used by managers of open-ended funds, in line with their obligations under applicable regulations. In these circumstances, suspension is likely to be in the best interests of fund investors.”

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