In what could be the first of several more, the Kames Property Income Fund and its feeder funds have been forced to suspend due to the current health and economic crisis.
Citing “turbulent market conditions” the fund managers Richard Peacock and Karen Fox say the suspension is due to the fact that it is impossible to accurately value the fund’s property holdings.
The Kames fund started to block instructions to purchase, sell or transfer shares or units in the funds two days ago.
It emerged this morning that Janus Henderson has also suspended trading in its £2bn UK Property fund as coronavirus creates difficulties for the independent valuation of the UK property market.
The fund’s website states that:
“The Kames Property Income Fund invests in assets that may at times be hard to sell. This means that there may be occasions when you experience a delay or receive less than you might otherwise expect when selling your investment… Whilst property valuations are conducted by an independent expert, any such valuation is a matter of the valuer’s opinion…”
In a statement put out to investors Kames Capital said that the Property Income Fund’s independent valuers CBRE had advised that due to the crisis it could not accurately price the holdings and, in accordance with FCA collective investment scheme rules, CBRE made the recommendation to close.
Kames under the management of Richard Peacock and Karen Fox had immediately made the Financial Conduct Authority aware of the situation as it began blocking any instructions to purchase, sell or switch shares or units in the funds.
A spokesperson said:
“Chief among these events is the ongoing coronavirus crisis, which I know is a real concern for all of us. At the same time, we have had to contend with a sharply lower oil price as well as the impact of the ongoing Brexit negotiations. These issues are affecting all areas of the stock market, including property investing… continued market volatility and uncertainly for property funds makes it difficult to provide a true value for the funds underlying assets”.
The funds suspension is to be reviewed every 28 days: “During the suspension we will continue to provide investors with regular updates on developments,” say the fund managers.
More High Street woes:
There’s more turmoil on the High Street as Carphone Warehouse announces it’s to close all its 531 stand-alone stores on the 3rd of April, with the result that there will be 2,900 redundancies. The firm says the move is not related to the coronavirus outbreak, but was because of the changing mobile market.
Also, embattled retailer Laura Ashley yesterday filed for administration. The retailer, which has 150 stores in the UK, and employs around 2,700 staff, has been struggling for some time, with the current crisis perhaps the “last straw”. The company said: “the Covid-19 outbreak has had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation,” in addition it transpires its main shareholder MUI Asia Limited was not able to step in with more money.
Meanwhile The Chancellor Rishi Sunak yesterday announced an unprecedented peacetime level of support for businesses and workers, “to protect against the economic emergency caused by the coronavirus.”
The promised support includes unlimited loans and guarantees to support firms and to help them manage their cash flows through an extended period, for how long no one really knows. The Chancellor will make available an initial £330 billion of guarantees – equivalent to a massive 15% of UK GDP, that’s on top of the £30 billion provided in last week’s budget.