A clutch of properties in the North West are among the 91 assets in M&G’s £2.5bn real estate fund, which was suspended this week amid Brexit-related uncertainty and a shaky retail outlook.
The M&G Property Portfolio contains five regional sites, according to the 2019 interim annual report published in March by the fund’s parent company M&G, a London-listed asset manager.
The five assets represent a mix of retail, leisure and industrial uses, and their exact values were not disclosed. At the time the report was published, the sites were:
- Royal Mail Distribution Centre, Orion Boulevard, Warrington, an industrial asset, valued at £20m-£100m
- Peel Retail & Leisure Centre, Lower Audley Street, Blackburn, valued at £0m-£20m
- Bolton Shopping Park, Trinity Street, valued at £0m-£20m
- Britonwood warehouse, Knowsley, valued at £0m-£20m
- 43 Eastgate Street, Chester, a retail unit, valued at £0m-£20m
Trading in the M&G Property Portfolio was halted on Wednesday after fears over Brexit, coupled with a challenging retail environment, prompted investors to seek to withdraw their money faster than the fund could sell properties.
In such situations, fund managers can become concerned over lack of liquidity in the fund and decide to halt trading for a period to prevent any decrease in value that may come about by investors quickly selling their assets and pushing down prices.
“In recent months, unusually high and sustained outflows from the M&G Property Portfolio have coincided with a period where continued Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector have made it difficult for us to sell commercial property,” M&G said in a statement.
“Given these circumstances, we have now reached a point where M&G believes it will best protect the interests of the funds’ customers by applying a temporary suspension in dealing.”
M&G said the suspension would be monitored daily and formally reviewed every 28 days. The suspension “will only continue as long as it is in the best interests of our customers, reopening as soon as liquidity levels have been sufficiently rebuilt”, it added.
The M&G Property Portfolio is a diversified fund that invests in 91 UK commercial properties across the retail, industrial and office sectors on behalf of UK retail investors. The fund managed assets of £2.54bn as of 31 October.
The fund’s top five most valuable holdings are the New Square, Bedfont Lakes office park in Heathrow; Wales Designer Outlet in Bridgend; Parc Trostre retail park in Llanelli; Fremlin Walk shopping centre in Maidstone, and the Iron Mountain distribution warehouse in Belvedere, Kent.
“Of [the fund’s] three core property sectors, retail is undergoing the greatest amount of change,” M&G’s report in March said. “Structural shifts in the way we shop are forcing retailers to appraise whether their stores are in the right location and fit for purpose. Profitability is being squeezed and even well-known brands have started to suffer.”