M&G Property Portfolio to reopen for dealing
M&G Investments is to reopen the M&G Property Portfolio and its feeder fund, the M&G Feeder of Property Portfolio (the Funds) for dealing as of midday on 10 May 2021.
The decision to lift the suspension has been taken by the Fund’s Authorised Corporate Director (ACD) and its Depositary, who are now satisfied the Fund has a suitable liquidity position for customers who wish to sell their investment and for those who wish to remain invested. The Financial Conduct Authority has also been notified.
A total of 38 carefully selected properties have been exchanged or sold by the Fund’s Manager, Justin Upton, resulting in reduced portfolio risk, strengthening the Fund’s income stream and decreasing the vacancy rate to 7.2 per cent. All assets sold or exchanged during suspension were at a combined -0.1 per cent discount to their net asset value, of which 38.8 per cent were disposals of Retail properties. Cash now stands at 33.2 per cent.
At a sector level, the Fund has reduced exposure to Retail from 38.4 per cent to 28.1 per cent and is now overweight to Industrials. Assets in the Office sector are focused on Central Business Districts. The portfolio’s exposure to prime and good secondary assets will enhance distribution potential. More than 90 per cent of both rental income and service charges for 2020 has been collected and the Fund has delivered an income distribution of 4.7 per cent.
Laurence Mumford, Chair of the Fund’s ACD, M&G Securities Limited, says: “We deeply regret the inconvenience that suspension has caused our customers and clients. The decision to suspend was taken to protect the interests of all of our investors, enabling the fund manager to sell assets in an orderly fashion. We believe this has preserved value for customers, while also maintaining the integrity and future prospects of the fund.”
The next three weeks will give clients and customers the time to consider their investment in the Fund. It should also allow external investment platforms the time to make necessary arrangements for the Fund to be available on their trading systems.
M&G is also making several changes to the Funds, including the pricing methodology, which will change to dual pricing on a full spread basis from 25 June. This will provide greater dealing clarity, reduce the potential for large price fluctuations and provide stronger alignment with the Fund’s long term horizon. In addition, the recently updated target cash weighting – circa 20 per cent in normal market conditions – will enhance liquidity management.
M&G will bear the costs of implementing these changes and a letter with a detailed explanation of the changes is being sent to M&G’s customers and clients, which can be found on our website.
In recognition of the inconvenience caused to customers and clients, M&G has waived 30 per cent of the Funds annual charge during suspension. This will continue until the Fund reopens. M&G will also continue to waive the fee on cash held above 20 per cent until the end of 2021.