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M&G reopens UK property fund frozen since 2019

Carolyn Cohn
·2-min read

By Carolyn Cohn

LONDON (Reuters) - M&G will reopen its 2 billion pound ($2.8 billion) UK property fund, which it suspended in December 2019, after selling 38 properties in the portfolio, the British asset manager said on Tuesday.

M&G froze the fund due to problems in the UK retail property sector and uncertainty over Brexit, it said at the time.

While many similar funds froze in March 2020 as a result of the coronavirus pandemic, most have now reopened, industry sources say.

"Today’s announcement brings the property industry closer to 'normal trading'," said Oli Creasey, property research analyst at Quilter Cheviot.

Aegon Asset Management said on Tuesday it expected to reopen its 400 million pound property income fund in the second quarter.

"We continue to make good progress with asset sales in order to raise liquidity," an Aegon spokesperson said by email.

The M&G Property Portfolio and its feeder fund will reopen on May 10 and the firm is waiving 30% of the fund's annual charge during the suspension because of the inconvenience to investors, it said in a statement.

M&G said the fund had sold real estate assets totalling 700 million pounds since the suspension, with a further 250 million pounds exchanged or under offer.

The assets were sold at a combined 0.1% discount to their net asset value and cash in the fund now stands at 33.2%, M&G said.

Funds investing in illiquid assets like property which offer the ability to take money out daily sometimes have to suspend trading to allow time to sell assets to meet redemption requests.

Britain's Financial Conduct Authority has proposed that property funds require a notice period of three to six months from the request for a redemption to the return of cash.

($1 = 0.7152 pounds)

(Reporting by Carolyn Cohn, Editing by Louise Heavens and Mark Potter)