Columbia Threadneedle has joined St James’s Place and re-opened its frozen property fund following a stamp of approval over the valuation of its assets but rivals funds are remaining cautious.
SJP and Columbia Threadneedle were among the raft of asset managers that suspended their property mandates in March after the economic fallout from the coronavirus made it impossible for valuers to accurately price real estate assets.
Close to £22bn of investor money was trapped in the frozen funds, which included SJP’s £1.3bn Property unit trust, £1.1bn Property Life fund and £1.2bn Property Pension fund, as well as the £1bn Threadneedle Paif.
But by noon on Wednesday SJP announced its £3.6bn property funds would resume trading after its independent valuer CBRE lifted the material uncertainty clause that triggered the suspension. “The removal of this clause means that they are now able to value with confidence the properties held within the funds,” a spokesperson for SJP said.
Hours later Columbia Threadneedle followed suit, confirming the Threadneedle Paif would re-open for dealing on 17 September.
Manager Gerry Frewin said that while Covid had turned short-term property returns negative during the first half of 2020, capital volatility has been easing and the longer-term case for property remains compelling.
“We appreciate that suspending dealings in the fund may have caused some inconvenience for our clients, however the decision to suspend dealing meant that no unit holders would be disadvantaged and ensured the fair treatment of all investors at a time of exceptional market uncertainty,” Frewin said.
CBRE’s change in stance follows a recommendation from the Royal Institution of Chartered Surveyors (RICS) of a general lifting of material valuation uncertainty on all UK real estate excluding certain assets in the leisure and hospitality sectors.
SJP and Columbia Threadneedle are only the second and third providers to unfreeze their property funds. In June BMO Global Asset Management lifted the suspension on its Property Growth & Income portfolio. The £490.4m fund, managed by Marcus Phayre-Mudge and George Gay, had much less exposure to UK physical property than some of its peers with 28.8% held in the asset class.
Janus Henderson and Aegon funds remain frozen despite verdict from CBRE
Despite valuers giving property funds the green light most are taking a wait and see approach. Janus Henderson and Aegon Asset Management, which also use CBRE as their independent valuer, told Portfolio Adviser they would be remaining shut for now.
A spokesperson for Janus Henderson said the fund board had decided the Henderson UK Paif and its feeder fund should remain to shut to give it time to raise additional liquidity to meet “known redemption requests on re-opening and reduce the risk of re-suspension in the short term”.
The Aegon Property Income fund, formerly known as the Kames Property Income fund, would need to go through its next valuation point at the end of September before a decision to unfreeze the fund can be made, a spokesperson for the company said.
“The MUC is also just one of several factors that need to be taken into consideration before a suspension can be lifted including liquidity, reduced market transaction volumes (a valuation isn’t any good to a fund to meet a redemption) and there still aren’t any transactions going through,” they added.
Other property giants weigh in
Aberdeen Standard Investments, which uses independent valuer Knight Frank, also said it is unlikely to reopen its £983.6m property fund before its next valuation on 30 September.
“Although the clauses have now been removed, 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,” a spokesperson said.
In an update posted to its website on Wednesday, Royal London said the current restrictions on its RL Property fund remain. But it added it expects its independent valuer Cushman and Wakefield to remove the uncertainty clause impacting its £390.7m RL Property fund by the end of the month.
The M&G Property Portfolio also remains closed, according to an update on its website on Tuesday, despite the fund’s independent valuer Knight Frank lifting material uncertainty clauses from all sectors except retail, leisure and hospitality.
M&G said as of 28 August, 54% of the fund’s net asset value (£1.1bn) is no longer subject to material uncertainty, rising to 64.7% (£1.4bn) if cash, Reits and indirect holdings are taken into account.
The fund’s current size is £2.1bn with a cash position of 8.2% and £129.9m of assets in solicitors hands for sale.
