St James’s Place has suspended trading in its £3.6bn property fund range, joining the nine other property portfolios which have already closed their doors to dealing.
The advice giant said today (March 19) it had suspended its three UK commercial property funds after its independent valuer, CBRE, was unable to accurately or fairly value the assets held in the range.
Over the past two days, a cohort of seven asset managers announced they would temporarily stop trading across their property fund ranges because the Covid-19 virus had created uncertainty in the UK property market.
This, in turn, made it difficult to value the property owned by the funds with the same degree of certainty as would otherwise be the case.
SJP said: “Property fund valuers across the market are currently unable to accurately or fairly value the properties within our property funds.
“Therefore, we have suspended dealing on our range of three UK commercial property funds – the SJP Property Unit Trust, Property Life fund and Property Pension fund.”
SJP said it was a challenge for the entire property sector at present, rather than SJP funds in isolation, and the decision had been taken in their clients’ best interests.
Rules announced by the FCA last year, due to come into effect in September 2020, require property funds to automatically suspend when their valuers find material uncertainty over the pricing of 20 per cent or more of their assets, but it seems property funds are acting on this advice now despite the rules not yet being implemented.
The FCA was concerned there was potential for investors to be treated unfairly if they bought or sold units at a price that did not reflect the underlying assets. Therefore, if the underlying assets could not be properly valued, the regulator said there was a “good case” for requiring the fund to suspend dealing temporarily.
This week’s round-up of suspensions also follows M&G’s gating, which suspended its fund over liquidity issues in December last year. The M&G Property Portfolio remains gated.
The current suspensions, including M&G, mean about £14.5bn of customer assets are now locked in suspended property funds.
Yesterday experts predicted the funds closed so far would soon be followed by the remaining UK property funds.
imogen.tew@ft.com
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