M&G is predicting its shuttered Property Portfolio will have enough cash to be able to reopen before the end of the second quarter.
The fund, which has been suspended since December 2019, sold two assets worth £97.7m in February, boosting cash levels to 25.3% of its £2bn of assets under management.
This is up markedly from January when total cash sat at 21.3% barely higher than the previous month.
A further £329m of asset sales are under offer or have exchanged, with a number moving towards completion, M&G said.
ACD finally sets a re-opening date
Last month the fund’s ACD said it was “actively” considering when to reopen. But following the proceeds raised from the February sales it was finally able to sketch out a timeline to begin trading sometime before the end of Q2.
“Whilst completion of all ongoing transactions cannot be certain, in anticipation of the fund’s cash position increasing to a sufficient level, we expect to be able to announce the reopening before the end of the second quarter – once the fund’s ACD and depositary are satisfied we have a suitable liquidity position for investors who choose to remain and those who wish to redeem,” M&G said.
See also: M&G Property Portfolio to remain shuttered after cash barely inches higher
So far £541.3m worth of assets have been sold since the fund suspended. M&G has waived 30% of the fund’s annual charge since that time and has not charged fees on cash held in excess of 20%.
Covid impact on commercial property will be felt for years
“The impact of Covid on commercial property is likely to last for years as the economy recovers and people and employers adjust their working practices permanently,” Lowcock said. “At the same time retail will begin to feel the impact on their businesses when they fully reopen this summer.”
“The additional issue for investors is the suitability of property funds. In a world where investors expect daily liquidity, an illiquid asset such as commercial property does not suit open ended funds. We would prefer such assets are invested through suitable vehicles such as investment trusts,” he added.
The latest M&G Property Portfolio update falls on the one year anniversary of the raft of property fund suspensions triggered by the Covid crisis.
Most suspended funds have resumed trading including the Threadneedle UK Property Paif which reopened back in September and the L&G UK Property fund which reopened in October. Janus Henderson’s UK Property Paif was the latest fund to resume trading on 24 February.
Alongside the M&G Property Portfolio, Aegon Property Income and Aviva Investors UK Property funds also remain shut.
The property sector brought in £117m inflows in January, according to data from the Investment Association, breaking a streak of outflows for the last four months of 2020 which totalled £401m.
