St. James's Place and Columbia Threadneedle property funds emerge from suspension

St. James's Place and Columbia Threadneedle property funds emerge from suspension

St. James's Place and Columbia Threadneedle have already opted to reopen their UK property funds after independent valuers were given the green light to remove Material Uncertainty Clauses (MUCs) yesterday (9 September), while other fund houses have told investors they need more time to assess the risks of ending their six-month suspensions. 

St. James's Place has lifted the suspension on its range of three UK commercial property funds, the SJP Property Unit Trust and the SJP Property Life and Property Pension funds, while Columbia Threadneedle has announced it is to reopen its £1bn UK Property Authorised Investment Fund (PAIF) and feeder fund on 17 September.

The Royal Institution of Chartered Surveyors (RICS) cleared the way for some property funds to reopen after it recommended a "general lifting" of material valuation uncertainty on the valuation of "all UK real estate", with exception of "some assets valued with reference to trading potential" on 9 September.

They will need to review their portfolios and make sure the bulk of them are now in scope to be accurately valued as a starting point."

However, Adrian Lowcock, head of personal investing at Willis Owen, warned not to "expect to see a rush to reopen from many providers" due to the timing of Brexit and a resurgence in cases of Covid-19.

"They will need to review their portfolios and make sure the bulk of them are now in scope to be accurately valued as a starting point," he said.

Among those providers that have so far chosen to keep the suspension of their property funds in place are Aberdeen Standard Investments (ASI), Janus Henderson and LGIM.

A spokesperson for ASI welcomed the removal of the MUCs but confirmed that it does not anticipate reopening its UK Property fund before its next valuation on 30 September, adding "the most recent valuation for the fund was 'uncertain' at the time and will require to be revisited in the normal course before any fund trading could conceivably re-commence".

The Janus Henderson UK Property PAIF and its feeder fund will also remain suspended "until further notice" following a review by the board of Henderson Investment Funds, although a further update will be provided within the next 28 days, "or sooner should the situation change."

In its statement, Janus Henderson revealed that the amount of the fund's portfolio that is no longer subject to material uncertainty is 73% based on end-of-July property valuations.

Meanwhile, LGIM has revealed that a single asset worth 1.7% of its Legal & General UK Property fund still has a MUC in place. 

A spokesperson from the group said: "Whilst there is now a higher degree of confidence from the independent valuers for most of the assets in the Legal & General UK Property fund and the Legal & General UK Property Feeder fund, the reopening can only take place once the funds' authorised fund manager is confident that doing so is in the best interests of investors.

"With the best interests of investors front of mind, the board is reviewing the situation in respect of the funds and will be communicating with investors in due course."

Lowcock added: "Many funds are not sitting on high cash balances at the moment, and they will be desperate to avoid a scenario where they have to close again if redemptions are too high.

"Therefore, we don't think the situation has been resolved for investors as yet, and it could take weeks, if not months, for funds to reopen."

Managing director of the Association of Real Estate Funds Paul Richards also welcomed the lifting of the material uncertainty clause "as one step on the path back to a normally functioning commercial property market".

But he said: "Fund suspension is not undertaken lightly and is done in the best interest of savers and investors. It is for individual funds to decide when to reopen having considered their investors' needs and their liquidity position."

In a statement, SJP said the removal of this clause meant it was "now able to value, with confidence, the properties held within the St. James's Place UK Commercial Property funds due to increased transactional evidence" and that the first client transactions will take place today (10 September).

Gerry Frewin, fund manager for the Threadneedle PAIF, claimed that the longer-term case for property remains compelling on an income and portfolio diversification basis as capital volatility has been easing.

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