Investments  

Janus Henderson suspends property fund amid buyer search

Janus Henderson suspends property fund amid buyer search
 

Janus Henderson has suspended trading in its property fund as it searches for a buyer for its underlying assets.

The company confirmed today (March 7) it is looking to sell the fund's portfolio, due to “various factors” including the forthcoming regulatory changes to the notice period for redemptions from property funds, which Janus Henderson said had led to “persistent” net outflows from the fund.

In a statement, the company said: “This has reduced assets under management materially to the point of challenging the portfolio’s future shape and quality, along with expected returns to investors.”

The property fund was suspended at noon on Thursday (March 3), alongside its feeder fund, a decision taken by the board of Henderson Investment Funds to ensure the portfolio sale is given the best chance to succeed. 

Simon Hillenbrand, head of UK retail at Janus Henderson said, should the company find a buyer, the net proceeds of the sale will be distributed to investors.

Although a completion date has not been confirmed, this could happen towards the end of March or beginning of April, he said.

“We believe it is in the best interests of investors in the fund that we take steps now to secure the best outcome for them.”

Last week Janus Henderson said it was exploring various options for the future of its property fund amid the backdrop of regulatory uncertainty.

Ryan Hughes, head of investment research at AJ Bell, said the news last week will have unsettled investors and could have resulted in a number of them looking to sell the fund, causing liquidity pressures that have been seen before. 

"By suspending the fund, it will allow for a more orderly process in selling but will no doubt cause significant concern for investors in the £1bn fund who now can’t access their money again."

He said the move again underlines why open-ended property funds remain ill-suited to the daily dealing expected from Oeics, as any pressure leads to the funds suspending to avoid investors rushing to the exist faster than the managers can sell.

"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," he said, adding that the conclusion to the FCA's review into the vehicles "can't come soon enough".

Last year the FCA launched an open-ended investment fund structure - the long term asset fund - giving investors to access to property, infrastructure and other illiquid assets but with a notice period of at least 90 days. 

The regulator's action is aimed at addressing the so-called "liquidity mismatch" which has seen open-ended property funds gate for withdrawals at various points over the past 10 years due to flurries of redemptions amid economic uncertainty - for example due to Brexit or the uncertainty surrounding the Covid-19 pandemic.