M&G latest firm to suspend property fund trading

M&G latest firm to suspend property fund trading

M&G has become the third fund house to freeze trading in the shares of its £4.4bn property fund amid concern about the EU referendum result.

Yesterday afternoon Standard Life became the first to take action when it suspended trading in its flagship £2.9bn real estate fund, followed by Aviva Investors which took similar action with its £1.8bn fund this morning (Tuesday 5 July).

This afternoon M&G, which is Prudential’s fund management arm, suspended shares in the trading of its Property Portfolio and its feeder fund.

In a statement M&G said: “Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the UK commercial property market since the outcome of the European Union referendum.

“Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading.

“This will allow the fund manager time to raise cash levels in a controlled manner, ensuring that any asset disposals are achieved at reasonable values.”

M&G’s Property Portfolio invests in 178 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors and is managed by Fiona Rowley.

The company said it will review the suspension every 28 days.

Henderson, Aberdeen and Schroders are among those thought to be vulnerable to the growing sense of pessimism around commercial property, an analyst has warned.

Aberdeen, Kames and Legal & General have all made “fair value adjustments” to their funds, thereby reducing the value of their portfolios, since the referendum on June 23.

This was something M&G had also done but all the other portfolios currently remain open for trading.

UK property had already come under pressure in the run-up to the vote. The IA UK Property sector endured a net £500m in outflows in April and May, according to Investment Association statistics.