M&G Investments (M&G) is to resume trading in the shares of the M&G Property Portfolio and its feeder fund, the M&G Feeder of Property Portfolio following a period of temporary suspension.
The move that will come into effect from noon on Friday 4 November will also see the fair value adjustment, originally applied to the funds on 1 July, removed in full, the company announced in a statement today.
M&G announced a temporary suspension on 5 July after investor redemptions rose markedly due to high levels of uncertainty in the UK commercial property market following the outcome of the European Union referendum.
M&G was part of a group of major firms operating within the property fund marketplace that announced suspensions and fair market value adjustments on property investments including Aberdeen, Aviva and Standard Life. Of the main players only Aviva remain temporarily suspended.
William Nott, chief executive of M&G Securities, said: “Suspending the fund wasn’t a decision we took lightly, but we felt it was the only way to protect the interests of investors in what were very unusual circumstances in the aftermath of the referendum.
“Suspension created an environment more akin to normal conditions, allowing us time to choose the most appropriate assets to sell at the right price in order to preserve the integrity and future of the fund. As such, the fund manager has kept higher quality assets while reducing the exposure to assets deemed riskier than their prime counterparts, putting the portfolio in a good position for any further volatility that may be experienced in the lead up to Brexit.”
As confidence returns to the market, 58 properties have been sold, exchanged or placed under offer for a total of £718m, M&G said.
The M&G Property Portfolio is a broadly diversified fund, which after all sales, will invest in 119 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors.
‘Really good news’
Patrick Connolly, investment specialist IFA at Chase De Vere, said: “This is really good news and is a further sign that commercial property funds are returning to normal. Going forwards it is important that investors remember that property is an illiquid asset class and so they shouldn’t try to use it to make short term tactical trades.
M&G added that the decision was taken in agreement with the Depositary and Trustee and The Financial Conduct Authority has also been informed.