The suspension is a proactive measure to protect the interests of clients, the wealth management firm said. A number of property funds have shut their doors and restricted exits in recent years, prompting the regulator to examine the sector.

UK wealth manager St James’s Place has suspended one of its property funds this week amid a number of withdrawals from clients and a fall in demand for commercial property in the UK.

In a statement, St James's Place said it had suspended dealing in the SJP Property unit trust and deferred redemptions in its corresponding life and pension funds as of 12.00 pm on Friday.

“The suspension is a proactive measure intended to protect the interests of clients,” the wealth manager continued. By implementing this measure, SJP said it aims to manage potential risks and maintain the stability of the property unit trust, life and pension funds. "A temporary reduction of 15 basis points in the annual management charge will apply to the unit trust and will remain under review."

The firm said it had been forced to suspend the fund due to a combination of factors, notably a drop in demand for UK commercial property, office space remaining vacant post-Covid and clients increasing withdrawals or limiting their investments. 

Gating the funds means that investors will no longer be able to put in money, neither will they be able to take any out.

“We have taken this step to protect the interests of clients. A combination of factors has led to our decision to suspend dealings in the property unit trust and defer payments in the pension and life funds. This action is also aimed at preventing the challenge of having to sell properties quickly to generate cash. Selling properties under such pressure may lead to the fund manager selling them for less than their actual market value, potentially resulting in financial losses for the fund and its investors," Tom Beal, director of investments at St James’s Place, said.

“During this period of suspension, we will be assessing market conditions and closely monitoring valuations of properties within the fund. We are committed to resuming dealing as soon as we are satisfied that conditions are right,” he added.

The episode, coming amid turbulence in UK financial markets, will remind investors of sagas, such as in the aftermath of the 2016 Brexit referendum, and a period during 2019, when some fund managers temporarily halted fund redemptions to manage liquidity  in open-ended funds, for example. In March 2020 asset managers Janus Henderson and Kames Capital suspended dealings in their UK property funds, citing coronavirus-induced turmoil as a reason. A year ago Columbia Threadneedle Investments suspended dealing in its CT UK Property Authorised Investment Fund and its feeder fund. It acted because the amount of cash in the fund had fallen to a level where future redemption requests could not be met. Such events have prompted the Financial Conduct Authority, the UK regulator, to examine the sector.