On Tuesday
27 November 2007 the Sterling Property fund moved to an outflow pricing
basis. This has caused unit prices to fall by around 5.3%.
As you may
have seen in the press, Schroders and M&G have announced large drops
in their property fund prices. They have also said some investors will
have to wait to withdraw money from their investments. Media comment has
added fuel to this issue and has encouraged many investors to reduce their
exposure to commercial property
This has
affected all our property funds and outflows from the Sterling Property
fund are now at a level that has caused us to change its pricing basis
to outflow. This move is an accepted way of dealing with this situation
and other companies’ funds have done the same in recent months.
Consequently,
where investors choose to leave the Sterling Property fund, they will
now receive their share of the value of the property less selling costs.
This is so they will not burden those remaining invested in the fund with
more than their fair share of costs. We hope these changes will encourage
investors to maintain their long-term commitment to property. We have
no plans to restrict investors’ access to their funds and will continue
to manage cash in the fund to meet investors’ requirements.
In addition,
prices fell by a further 1.7% following a revaluation of the underlying
property assets by the funds’ independent valuers.
Investment
in commercial property is known for periods of strong growth followed
by downward adjustments. Commercial property fund prices have fallen over
the last three months after a ten-year period of sustained double-digit
growth. Although commercial property values remain under short-term pressure,
these mark-downs may present a buying opportunity for the longer-term
investor.
Please see
the Questions
and answers
for more information. Please contact your adviser if you need advice.
We strongly recommend you speak to your adviser before taking any action..
28 November
2007.
