M&G Property Portfolio — Important information on the suspension of dealings

The Authorised Corporate Director of the M&G Property Portfolio (“the Fund”) has decided it can best protect the interests of investors in the Fund by maintaining the temporary suspension in dealing in its shares.

Continued suspension will allow the Fund’s managers to carry on raising cash to meet client redemptions in an orderly fashion, while preserving value for the Fund’s shareholders in the long term.

Dealing in the units of the M&G Property Portfolio was temporarily suspended on 4 December 2019, due to high levels of withdrawals by investors related to ongoing uncertainty over Brexit during 2019 and structural shifts in the UK retail sector. Since then, the Fund’s managers have made good progress in raising cash by making selective disposals at market prices, while maintaining a balanced portfolio which allows them to continue to deliver the Fund’s objective of providing income and growth.

Since the Fund’s suspension, we have exchanged or completed on the sale of £70.4 million of assets and a further £172.2 million are either under offer or in solicitors’ hands. As at the end of December 2019, the cash held by the Fund was 4.8%.

Jack Daniels, Chief Investment Officer of M&G plc, says: “Since suspending the Fund, we’ve been encouraged by the support of many investors in the Fund, who understand our decision to give the managers room and time to complete disposals from the portfolio at fair prices. While customers want ready access to their investments, it’s also important that their long-term interests are protected.”

“Historically, we have held a low cash buffer in the conviction that our customers pay us to invest their money, not to keep it idle - particularly in times of near-zero cash interest rates. We believe that as an asset class, commercial property continues to have an important role to play in helping customers diversify their investment portfolios.”

The Fund continues to be actively managed during suspension of dealing, with income payments and fund reporting as normal. M&G will continue to waive 30% of the annual charge for the Fund in recognition of the inconvenience caused to investors.

Fund activity update

• The Fund’s retail vacancy rate (as of end December 2019) is below the MSCI IPD Quarterly Universe Index at 3.4% versus 5.14%.
• Completions since the end of December: no change
• Contracts exchanged since the end of December: no change
• Under offer/in solicitors’ hands: £172.2 million

M&G is to continue the temporary suspension of dealing in the M&G Property Portfolio and its feeder fund until further notice. The decision has been taken by the Fund’s Authorised Corporate Director (ACD) in the interests of protecting the Fund’s investors with the agreement of the Fund’s Depositary. The Financial Conduct Authority has also been informed.

The immediate priority is to raise cash levels in a controlled manner. The fund managers and associated teams are working hard to increase the Fund’s cash position and since the end of November, they have exchanged or completed on £70.4 million of assets and a further £67.2 million is either under offer or in solicitors’ hands. Once cash levels have been sufficiently restored, the Fund’s ACD will re-open the Fund for dealing.

Naturally, the Fund is still being actively managed and M&G is regularly communicating with clients, customers and other stakeholders. Whilst under continuous review by M&G and the Depositary, the ACD will formally report on the status of the suspension on a monthly basis and clients and customers will be notified in advance of reopening the Fund.

The Fund’s assets under management as at 30 November 2019 is £2.5 billion, with a cash position of 4.8%.

Fund activity update

• The fund’s retail vacancy rate is below the MSCI IPD Quarterly Universe Index at 3.8% versus 5.1% as of 30 November.
• Completions since the end of November: Ravenside Retail Park in Edmonton for £51.4 million.
• Exchanges since the end of November: 20 Kingston Road, Staines for £19 million.