Due to the impact of coronavirus, the appointed independent valuers of commercial property funds have uncertainty around the valuation of UK properties.
The decision is consistent with the new rules issued by the Financial Conduct Authority (FCA), under which a fund must suspend dealing if a valuation is materially uncertain for 20% or more of the assets held in the fund. A period of suspension will give the valuers time to better understand the impact that coronavirus crisis is having on direct property market valuations.
This suspension differs following the BREXIT vote in 2016, where the driver was a lack of liquidity (cash) being held within some property funds to meet client redemption requests.
At the moment, the suspended funds will continue to show an indicative price, and the value of the remaining units will be included in the overall value of the investments seen online and in statements. As it is not possible to buy or sell units in a suspended fund, clients will be unable to top-up (regular or adhoc), switch or make new withdrawals out of the fund.
Automatic withdrawals will be unaffected unless the only fund held is a suspended fund, in which case payments will be deferred until the suspension is lifted.
The fund suspensions will remain in place until notification that the suspension instruction has been lifted. At this time, it is difficult to say how long it will be before each fund’s property holdings can be valued with more certainty.