The temporary suspension and deferral were made as a result of a fall in demand for UK commercial property, office space remaining vacant following the Covid-19 pandemic as employees continue to work from home, as well as clients increasing withdrawals or limiting their investments.

The suspension was described by SJP as a “proactive measure” in order to protect the interests of clients, manage potential risks, and maintain the stability of the Property unit trust, life and pension funds.

SJP has implemented a temporary 15 bps reduction to its annual management charge, which will apply to the unit trust and remain under review.

Tom Beal, director of investments at SJP, said: “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.

“During this period of suspension, we will be assessing market conditions and closely monitoring valuations of properties within the fund.

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“We are committed to resuming dealing as soon as we are satisfied that conditions are right.”

Jonathan Samuels, CEO at Octane Capital, commented on the impact he believes this news could have on the bridging market: “Whenever property funds are gated in this way, it sends shockwaves through the market.  

“SJP funds are primarily commercial focused, and their actions will hit sentiment and, ultimately, commercial values due to their size.

“It shows that investors are nervous about commercial property and, to be fair, they have every right to be.

“This will be damaging for those lenders with significant commercial property exposure on their loan books.

“However, as mainstream lenders retreat, there may be good opportunities for brave bridging lenders to lend against quality assets at reasonable leverage — as I say, they have to be brave though!”

Nick Baker, CCO at Allica Bank, also gave his take on how the developments with SJP may impact the commercial market: “The ongoing challenges being faced by open-ended UK commercial property funds can in large part be attributed to them having traded through Brexit, Covid-19 and the fabled ‘mini’ budget — periods of material market and, crucially, valuation uncertainty.

“Private investors in these asset classes expect daily dealing in illiquid assets (liquidity-mismatch) and, at a time of higher risk-free (term deposit) yields, it is to be expected that many investors in open-ended funds may head for the door and seek a home for their funds elsewhere.

“That said, I do not believe there is an immediate or even obvious look-across into our core commercial property investor market.

“Regional investors and SMEs will continue to invest in portfolio growth, at the right price, and commercial property acquisitions will remain a key element of that.

"Indeed, with some signs of commercial property market valuations stabilising and commercial property funds reporting their first net inflows since July 2022, the reality of the situation may be slightly more positive than the headlines suggest."