Janus Henderson has suspended its £2bn UK Property fund as coronavirus creates difficulties for the independent valuation of the UK property market.
It follows the £585m Kames Property Income fund, which suspended on Monday, also due to valuation concerns. Combined with the £2.3bn M&G Property Portfolio, which suspended in December due to liquidity concerns, there is now £4.9bn worth of funds suspended in the Investment Association UK Direct Property sector.
A Janus Henderson spokesman said its independent property valuer, CBRE, had declared there is “material uncertainty” of valuations in the UK property market, including direct property assets owned by the Janus Henderson UK Property PAIF and its feeder Fund.
CBRE is the same independent valuer used by Kames. Portfolio Adviser questioned CBRE about its valuation process and the challenges presented by Covid-19 but it did not wish to respond.
The Janus Henderson spokesperson said incoming regulation for non-Ucits retail schemes (Nurs) had informed the decision.
“Reviewing this material uncertainty in light of the FCA’s incoming regulations on illiquid assets and open-ended funds, which become effective in September 2020, we believe we need to protect the interests of all investors by suspending dealing in the fund and the feeder.”
All property funds likely to suspend
AJ Bell head of active portfolios Ryan Hughes said the major economic turmoil associated with coronavirus means the FCA rules have effectively been adopted early.
Hughes said: “With two of the largest independent valuers saying they cannot accurately determine the value of property, it’s almost certain that all open-ended property funds will now have to suspend dealing.
He questioned the future of daily dealing funds where there is liquidity mismatch between the fund and its underlying holdings. “With the FCA continuing to look at the appropriateness of illiquid assets in daily traded funds, surely this must spell the end of such structures to avoid damaging the confidence of investors in the funds industry.”
