M&G awaits return to normal to lift property fund suspension

M&G awaits return to normal to lift property fund suspension

As asset managers have started lifting the temporary suspension imposed on their property funds, M&G Investments is still waiting on the sidelines before giving a signal it will follow suit.

M&G was just one of several large fund groups which were forced to pause trading in their commercial real estate funds after receiving a frenzied rush of redemption requests from investors panicking about the outcome of the EU referendum.

But the property fund freeze has now started to thaw, and earlier this week (26 September) Columbia Threadneedle reopened its £1.3bn UK Property Trust PAIF, while Standard Life Investments announced it would lift the suspension on its £2.6bn UK Real Estate fund on 17 October.

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Henderson has said it will reopen its £3.4bn UK Property Trust PAIF on 14 October, while Aviva has indicated the suspension on its £1.5bn Investment Property Trust could last until next year.

Aberdeen was quick to reopen its £3.4bn UK Property fund just days after its suspension, although investors faced a 17 per cent reduction in their investment if they chose to withdraw their money.

A smaller property investment vehicle from Canada Life, holding around £222m assets, also reopened at the beginning of September.

But M&G, which halted trading in its Property Portfolio on 5 July, is still yet to give an indication about when its fund will start trading again.

FTAdviser understands the group is waiting for a more “normal” UK commercial property market, which has been pummelled by investor uncertainty in light of the Brexit vote.

The fund is also aiming to reach a cash holding target of 12.5 per cent, as well as additional cash for working capital and likely client redemptions.

Last Friday (23 September), the fund’s cash position had risen to 7.8 per cent, with assets under management totalling almost £4.1bn, making it the largest of all the suspended property funds.

M&G also continues to apply a fair value adjustment to the fund of £30m, which is reviewed regularly.