St James’s Place suspends property fund as investors pull cash and demand falls
Wealth manager St James’s Place has suspended one of its property funds amid a flurry of withdrawals from clients and a “fall in demand” for commercial property in the UK.
In a statement today, the UK’s biggest wealth manager said it had “suspended dealing” in the £924m SJP Property unit trust and deferred withdrawals in its corresponding Property life and Property pension funds as of 12pm on Friday.
Tom Beal, director of investments at St. James’s Place, said it had “taken this step to protect the interests of clients” and avoid a fire sale of its assets to meet clients’ requests for cash.
“This action is also aimed at preventing the challenge of having to sell properties quickly to generate cash,” he said. “Selling properties under such pressure may lead to the fund manager selling them for less than their actual market value, potentially resulting in financial losses for the fund and its investors.”
Beal said that during the suspension, the firm “will be assessing market conditions” and “closely monitoring valuations of properties within the fund”.
“We are committed to resuming dealing as soon as we are satisfied that conditions are right,” he added.
The firm said it had been forced to suspend the fund due to weakening demand for UK commercial property, office space remaining empty and clients increasing withdrawals or limiting their investments.
St James’s Place said it would temporarily slash the annual management charge on the fund by 0.15 per cent.
The move follows a similar decision from asset manager M&G last week which moved to pause withdrawals in its £565m UK property fund, which peaked at nearly £5bn in assets in 2016, according to Citywire.
UK property funds have been among the hardest hit by outflows amid falling valuations and waning demand for commercial property like offices and retails space over the past year.
Property funds have suffered consecutive outflows over the 13 months to September, according to funds data tracker Calastone, including £428m in the nine months to September.
St James’s Place’s move to freeze the funds also comes after a troubling week for the firm in which it confirmed it would overhaul its fees structure after reportedly coming under pressure from regulators.
Shares in the firm are trading down by nearly 25 per cent over the past month.