Janus Henderson suspends £1bn property fund as sale fast-tracked
The Janus Henderson UK Property fund has been suspended to “protect the interests of investors” as it looks to expedite the sale of its portfolio.
The Board of Henderson Investment Funds Limited has suspended dealing in the PAIF fund and feeder fund with dealing requests received from 12-noon on 3 March 2022 being rejected.
In a note to investors, the board said the ongoing uncertainty in the UK over the future of open-ended funds invested in direct (physical) property has led to “persistent net redemptions” since February 2021 when the funds reopened, and despite their “strong relative and absolute performance”.
Janus Henderson explained that if it needs to sell properties to cover redemption requests, it will mean disposing of its most liquid and in demand properties in the portfolio, which will most likely lead to weaker performance, reduced levels of rental income and increased fund-price volatility for investors. This would then spiral into more redemption requests, further property sales and diminishing returns.
“We believe it is in the best interests of investors in the funds that we take proactive steps now to secure a better outcome. Having fully researched and considered a broad range of options, we believe the best solution is to expedite the sale of all the property assets of the Janus Henderson UK Property PAIF to a single buyer”, it said.
The news comes amid speculation that Janus Henderson was looking for a buyer for the fund as it appointed CBRE to manage the process.
It added it wants to avoid a protracted wind-up of the funds and “putting the funds into suspension now gives the sales process the best opportunity to proceed to a successful conclusion, which we believe to be in investors’ best interests”. It remains optimistic that a sale can be achieved/finalised towards the end of March/early April 2022”.
Further, upon competition, it would aim to return proceeds to investors by the end of April 2022.
Ongoing charges will continue to apply and income distributions will continue. Income reinvestments won’t be possible, and money will instead be paid to investors via cheque or bank transfer. Accumulation class holders will not be affected.
Simon Hillenbrand, head of UK retail, said: “We are acutely aware of the frustration that the dealing suspension may cause you and would like to thank you again for your patience during this challenging period.
“The suspension will be formally reviewed at least every 28 days, but we anticipate that we can conclude this process in a prompt manner and hope to be able to be in position to give you a more meaningful update by the end of March.”
‘Little option but to suspend dealings’
Ryan Hughes, head of investment research at AJ Bell, said: “This move from Janus Henderson once again underlines why open-ended property funds remain ill-suited to the daily dealing expected from OEICs. The fundamental mismatch in liquidity means that as soon as funds come under pressure, they have little option but to suspend to avoid investors rushing for the exit faster than the managers can sell the underlying assets. It’s certainly possible that this move may push investors in the few other open ended property funds to re-evaluate their exposure and potentially sell out, causing a ripple effect.
“The whole property sector has been under a cloud for some time given the FCAs review into the space and we still await the outcome of that process. Quite clearly, it can’t come soon enough for investors who remain in limbo and once again see their assets stuck in a fund that they can’t sell.”