London - M&G Investments (M&G) has decided to continue the temporary suspension of trading in the M&G Property Portfolio and its feeder fund until further notice. The decision has been taken with the agreement of the Fund's Depositary and the Financial Conduct Authority has been informed.
M&G believes suspension is the best way to protect the interests of all the Fund's shareholders. It allows the fund manager time to raise cash levels in a controlled manner so that asset disposals can be achieved at reasonable values.
M&G aims to reopen trading in the fund as soon as practically possible - once conditions in the commercial property market become more normal and the fund manager has raised sufficient cash in the portfolio.
Progress on cash levels has already been made with the disposal of seven assets since 5 July 2016. The fund manager has a cash target of 12.5% of the portfolio, plus additional money for working capital and property maintenance.
The Fund’s assets under management as at 31 July 2016 were £3.96 billion, with a cash position of 5.1%.
On the advice of Knight Frank, the Fund’s independent valuer, the M&G Property Portfolio is now being valued twice a month, having been valued weekly during July 2016. Knight Frank continues to report a degree of uncertainty around property asset values.
In consultation with Knight Frank, M&G continues to apply a fair value adjustment to the Fund. An adjustment of £200 million to the value of the Fund was made on 1 July 2016 and this was lowered on 20 July 2016 to £150 million.
The suspension of the Fund will continue to be reviewed regularly by M&G and the Depositary. We will notify Fund shareholders in advance of any lifting of the suspension.