M&G has lifted the suspension on its Property Fund to allow clients to trade with effect from 12 noon on 4 November 2016.
Trading in the fund was suspended on 4 July 2016 as the manager received a large number of requests from investors to sell their investment. Property funds hold a cash buffer to satisfy sales, which is usually sufficient to ensure the manager is not forced to sell properties. However, the increase in requests after the EU referendum was such that the cash buffer was reduced to a level the manager was not happy with.
M&G therefore temporarily stopped investors selling (or buying) units in the fund to afford the manager time to find suitable buyers for some of the properties. If forced to sell quickly she could be required to accept less than fair value, to the detriment of remaining investors.
Since July, the manager has completed, exchanged or agreed to sell 58 properties totalling £718m. Cash is now at a level the manager feels is sufficient to meet normal redemption requests. While the manager hopes to keep the fund open, any significant increase in requests from investors to sell their holding could cause the fund to re-close.
Instructions to buy or sell units in the fund can be placed online or via the phone. If you wish to place a deal online in time for the first valuation point your instruction needs to be received before 8am on 4 November. Any regular savings contributions accumulated since the fund closed will not automatically be invested. To invest any accumulated regular savings contributions or to restart regular savings into this fund, please log into your account and place an instruction online.
Fiona Rowley, the fund’s manager, remains positive in her long-term outlook for the UK commercial property market. However, given the uncharted territory ahead, she expects volatile performance over the shorter term.
Our latest views on the property sector are available here.