M&G, the EUR 1.04 bn offshore UK property fund, confirmed Friday that it is now requiring institutional investors to provide 90 days notice before redeeming investments, but denied a report in the Financial Times that the move was necessary to conduct an emergency sale of property assets.
M&G, the EUR 1.04 bn offshore UK property fund, confirmed Friday that it is now requiring institutional investors to provide 90 days notice before redeeming investments, but denied a report in the Financial Times that the move was necessary to conduct an emergency sale of property assets.
M&G is the European investment management arm of British financial services group Prudential. The property fund, launched in 2004, is designed primarily for institutional investors and has 90-days notice redemption clauses for institutional investors. It said that retail investors in the fund would not be affected by the decision. The notice period for institutional investors has previously been waived as redemptions have been matched by what the fund’s press office says have been consistent and large inflows. ‘However, following the continuing trend of net redemptions in the fund, we have made the decision that the notice period will not longer be waived in order to protect remaining investors of the fund.’
'These provisions for institutional unit classes are designed to manage liquidity in a controlled and prudent manner to protect existing unitholders within the fund, by allowing the fund manager 90 days to sell properties to release proceeds to investors,' the fund said but denied this was tantamount to an emergency sale of assets.
The fund said that the removal of the waiver is a standard feature designed to manage liquidity and the move has been well received by institutional investors. Nonetheless, some analysts have taken M&G's move as a signal of a growing crisis hitting the real estate sector.
For its part, M&G said while the commercial property market may be affected by short-term negative sentiment, it continues to believe that the underlying fundamentals of property are sound, 'and the long-term rational for the asset class as part of a diversified portfolio is unchanged.'