Janus Henderson has confirmed the sale of assets in its UK Property PAIF fund following its suspension in March, assuring investors the sale price is “above the most recent independent valuation” used to price the funds.
In a letter to investors today (April 29), the global asset manager’s UK retail head, Simon Hillenbrand, said the fund had assets of just over £1bn, but the sale price achieved by disposing of the individual properties was higher than the unit price of the shares in the fund, representing a gain for investors.
“We believe this provides a good outcome for investors given the ongoing uncertainty faced by daily dealing property funds,” he said.
Funds have now been put into termination to allow the sale to complete, which is expected to be finalised in the week commencing May 30, 2022.
The asset manager has put the fund sale down to, among other things, incoming regulatory changes to property fund redemption notice periods, which it said had led to “persistent” net outflows from the fund.
“We hope to be in a position to instruct the payment of proceeds roughly two weeks after the completion date and currently estimate this to be in the week commencing 13 June 2022,” said Hillenbrand. The asset manager will later confirm these dates via its website.
This payment, Hillenbrand explained, will be made up of the net proceeds from the property sale and the remaining cash held by the fund.
Termination of funds also requires an additional income distribution. For income share or unit holders this will be paid on June 28, whereas accumulation share or unit holders will receive this as part of the proceeds returned to them.
The cost of selling the direct portfolio of properties will be borne by the funds, which the asset manager said has been reflected in the ‘bid’ price. Meanwhile the administrative costs of terminating the funds will be borne by Janus Henderson.
The return of proceeds to investors will be treated as a ‘disposal’ for UK tax purposes, Hillenbrand said, meaning investors may be liable to Capital Gains Tax on any gains arising if held outside a tax wrapper.
Unless investors hold their investment in a Janus Henderson Isa, they cannot switch into another of the asset manager’s funds.
Oli Creasey, property research analyst at Quilter Cheviot, said the fact the sale was taking place above book value further reduced any concerns that this was some sort of distressed event.
“What we don’t yet know is how far above book value the sale will take place at – clearly there is a difference between a 1 per cent additional return vs 10 per cent - and as the fund will bear the costs of the sale (lawyers/agents/etc) there is a risk that a small margin could still erode shareholder value.
“However, given the likelihood that JH are not forced sellers, we think it is unlikely the fund would transact at a price that does not produce a positive net return for shareholders.”
