Many clients have a commercial property fund as part of their retirement portfolio.
Given the impact of the COVID-19 virus outbreak on global financial markets, the property Funds’ independent valuers, who are key to providing data to allow fund pricing, consider there is material valuation uncertainty around many types of property. Restaurants, hotels, leisure outlets, some retail property in particular are difficult to value with any certainty just now. This combined with the practical issues that valuation surveyors can’t inspect the assets compounds the problem.
This makes it impossible to provide an accurate value of the underlying properties in the Funds. This means the fund managers cannot be confident about the valuation of properties and therefore in the interests of investors and in the light of the asset managers’ regulatory responsibilities, they have taken the decision to suspend or defer the Funds. We are trying to confirm if this applies to all property funds that we support but we believe that to be the case as the underlying issue is valuation and not liquidity as was the case following the referendum on EU membership. The asset managers have taken this action as a prudent and temporary measure until such times as these extreme conditions stabilise and the uncertainty around property valuations is removed and we believe this action is equitable albeit regrettable. We would imagine that it might be several months before these suspensions are lifted. It is impossible to know at this time.