James’s Place (SJP) has stopped dealings in one of its property trusts as demand for commercial buildings falls and working from home increases.
The wealth manager said the suspension of the £820m fund was a ‘proactive measure to protect the interests of clients’ follow what it said were ‘a number of challenges’.
It highlighted falling demand for UK commercial property as well as office spaces remaining vacant following the pandemic as many employees continued to work from home despite the end of lockdown restrictions. SJP also noted some of its clients had ‘increased withdrawals’ from the fund and had limited their investments, adding that the fund’s cash levels have fallen to a low enough level that it needed to take action.
Demand for UK commercial property has slumped since the pandemic as office spaces remain vacant
The gating of the fund means investors would no longer be able to put in money but also would not be able to take any out.
Tom Beal, director of investments at the wealth manager, said: ‘We have taken this step to protect the interests of clients.
A combination of factors has led to our decision to suspend dealings in the property unit trust.’
He added that suspending the fund would prevent the firm from having to sell properties quickly and at a discount to their market value in order to raise cash.
‘During this period of suspension, we will be assessing market conditions and closely monitoring valuations of properties within the fund,’ he said.
‘We are committed to resuming dealing as soon as we are satisfied that conditions are right.’
The firm also announced it has decided to defer redemptions from two of its other property funds. Life and pension fund investors could request their money back but it warned this would take longer than usual.
Commercial property in the UK has taken a hammering in recent years as lower demand following the pandemic and rising interest rates have hit valuations of buildings across a wide range of sectors including shops and offices.
The move from SJP came after rival investment manager M&G last week said it would begin winding down its main property fund.