M&G announced yesterday it will lift the suspension of the M&G Property Portfolio Fund, and its feeder fund, on May 10th 2021, following restructuring.
Laurence Mumford, Chair of the Fund’s ACD, M&G Securities Limited, said he deeply regretted the inconvenience caused for customers, but “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.”
38 properties have been exchanged or sold Justin Upton, the Fund’s Manager, to reduce risk, strengthen the Fund’s income stream and decrease the vacancy rate to 7.2%.
All assets sold or exchanged during suspension were at a combined 0.1% discount to their net asset value – of which 38.8% were retail properties.
At a sector level, the Fund has reduced exposure to Retail from 38.4% to 28.1% 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% of both rental income and service charges for 2020 has been collected and the Fund has delivered an income distribution of 4.7%.
On the suspension of trading Mumford continued, “We believe this has preserved value for customers, while also maintaining the integrity and future prospects of the fund.”
Over the next three weeks clients and customers have the time to consider their investment in the fund and the relevant trading platforms to make arrangements for Fund’s availability 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% 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 their website.
In recognition of the inconvenience caused to customers and clients, M&G has waived 30% 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% until the end of 2021.