After much debate, Square Mile has taken the decision to suspend the ratings on all the property funds we recommend.

Following a slowing of returns from commercial property, and exacerbated by a fall in property values and a worsening of sentiment following the UK's vote to leave the European Union, there has been a significant outflow of retail money from the property sector. This has led to a series of events of which investors should be aware. Firstly, many funds have swung their prices to a cancellation basis, reflecting greater outflows than inflows. The exact impact that this had on price will depend on the fund, but has generally been in the region of 5%. Secondly, following the Brexit vote many funds applied a fair value price adjustment, further reducing the price of their funds by 4-5%.

These measures, however, did little to stem the flow of money out of funds and several funds in the sector have now suspended trading in order to give them the time to sell properties in an orderly fashion. At present this affects the following Square Mile rated funds: Aviva Investors Property Trust, Henderson UK Property PAIF, M&G Property Portfolio and Standard Life Investments UK Real Estate fund. We have suspended our rating of these funds with immediate effect and until at least the time at which they resume trading.

Whilst there is no suggestion that our other rated fund, the L&G UK Property fund, has any intention of suspending dealing in their fund, we feel that investors should be aware of this backdrop. Square Mile have therefore taken the decision to suspend our ratings of these funds also until further notice.

Our decision to suspend our ratings of property funds does not diminish the respect we have for the managers of these funds, but rather reflects market conditions and investor sentiment and the impact that we feel this could have on the managers' ability to meet their objectives. As a house we continue to value both the diversification benefits and the income generating potential of property as an asset class. However, at this point we cannot discount the possibility that market forces will dictate any commercial property fund's ability to trade, at least in the short term, and feel it more prudent to suspend all of our ratings in the property sector. We will continue to monitor the situation closely and retain a good dialogue with the managers of all of our rated funds. We will review our decision to suspend each of these ratings on a regular and frequent basis, taking into account the individual characteristics of each strategy.