St James’s Place has suspended or ‘gated’ its SJP Property unit trust to stop redemptions.
A trust being gated means investors in the unit trust cannot take out their money until the restriction is lifted.
Wealth manager St James has also deferred redemptions from two other property funds, according to reports today with withdrawals still allowed but on a staggered basis.
SJP Property had assets of £826 million in its latest valuation, but made up of offices, warehouses, and retail parks liquidity becomes an issue if there is a run of money being pulled out.
St James’s Place cited “challenges” in the property market for the decision, including the impact of working from home.
“We have taken this step to protect the interests of clients,” Tom Beal, director of investments at St James’s Place, said. “This action is also aimed at preventing the challenge of having to sell properties quickly to generate cash.
“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.”
M&G started to wind down its main property fund last week due to similar problems, with calls in recent months to end open-ended property investment vehicles entirely due to liquidity issues.
Shares in St James’s Place edged higher after dropping initially on the news.
Last week, it said it was cutting fees at a cost of £140 million.