Several asset managers have suspended trading in their open-ended property funds, citing “material uncertainty” about asset prices in the midst of the coronavirus lockdown.
Janus Henderson UK Property (GB00BP46GF57) and Kames Property Income (GB00BK6MJD59) suspended trading on 16 March, with Aviva Investors UK Property (GB00BYYYYX64) following suit on 18 March. Standard Life Investments UK Real Estate (GB00BYPHP536), Aberdeen UK Property (GB00BTLX1F24), Legal & General UK Property (GB00BK35DV33) and Threadneedle UK Property (GB00BQ1YHV24) have also suspended trading.
Fund managers cited the fact that property was proving difficult to accurately value amid the coronavirus pandemic.
“The valuers of the Kames Property Income fund believe the current market turmoil makes it difficult to provide a true value for the fund’s underlying assets,” a Kames spokesman said. Janus Henderson added that CBRE, the independent valuer for its property fund, had warned there was “material uncertainty around the valuation of UK physical properties across the market”.
Many open-ended property funds have maintained significant cash buffers in the wake of 2016, when Brexit-induced uncertainty caused several of them to temporarily suspend trading. Janus Henderson noted that it had a 17.4 per cent cash position at the end of February. But an inability to value assets makes it difficult to run such funds regardless.
“We believe there is a material risk that investors may buy and sell shares/units at a price which does not fairly reflect the value of those shares/units. If we allow dealing to continue some investors may be advantaged at the expense of others,” an Aviva Investors spokesman said.
M&G Property Portfolio (GB00B8FYD926), which suspended trading late last year amid hefty investor redemptions, remains closed to deals for now.
