Suspension Review and Update
At the time of the dealing suspension declared on 17 March 2020, we announced that the situation would be carefully monitored and the suspension would be reviewed at least every 28 days. Since then we have been closely monitoring the market conditions and have had a regular ongoing dialogue with CBRE (the appointed independent valuer of the Janus Henderson UK Property PAIF).
Last week the Board of Henderson Investment Funds Limited (HIFL), which is the authorised corporate director (ACD) for the fund, formally reviewed the current suspension and has agreed with the fund’s depositary that, based on the feedback from CBRE, the funds would remain suspended whilst there continues to be material valuation uncertainty across the fund’s direct property investments. The dealing suspension therefore remains in place until further notice. The situation will continue to be monitored by the ACD with a further update provided within the next 28 days or sooner should the situation improve.
The impact on real estate from the material valuation uncertainty has continued to evolve as information on transactions and rent collection has become clearer. However, because of the speed with which the economic and social situation is changing, valuers have responded differently resulting in substantial March month-end valuations variances between property funds. Some valuers believe the most visible effect of COVID-19 is focussed on assets with retail and leisure-based occupiers and as a result they have typically reduced values of assets in only these two sectors. CBRE believes the effect was immediately much more far reaching and has consequently reduced values across all sectors with very few exceptions (eg some of our supermarket holdings). Supermarkets, pharmacies and some logistical assets continue to operate.
CBRE additionally confirmed to HIFL that “‘For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’ declaration does not mean that the valuation cannot be relied upon. Rather, the phrase is used in order to be clear and transparent with all parties, in a professional manner that – in the current extraordinary circumstances – less certainty can be attached to the valuation than would otherwise be the case.”
Our approach of owning high-quality properties, seeking robust tenants on long leases in good locations – which in many cases look set to benefit from long-term structural shifts in the market – has not changed. To help manage the economic effects from the COVID-19 pandemic, we are working with all tenants and have offered all to move to monthly rents to assist with their cashflow, should this be something they wish to do. We have offered vacant space and potential use of carparks in shut assets to the NHS and the government for use where appropriate.