M&G Property Portfolio unlikely to open in 2020 despite 'glimmer of hope' for investors
Valuer Knight Frank further lifts material uncertainty clause
Investors were given “a glimmer of hope”, despite the continued suspension of the M&G Property Portfolio, as independent property valuers have removed material uncertainty clauses from two further sectors in the market.
In an update to investors, M&G said 28% of its portfolio has now had clause removed after its valuer Knight Frank - along with other RICS-approved companies - said it would no longer apply to central London offices and professionally managed, institutional grade student accommodation.
These two areas of the market account for 5.4% of the M&G portfolio and add to the 23% in the UK industrial and logistics sectors that saw their clauses removed in June.
FCA to consult on future of open-ended property funds
Laura Suter, personal finance analyst at AJ Bell, said the update gave trapped investors "a small glimmer of hope", despite almost three-quarters of the fund's assets having uncertainty over their valuations - a figure still well below City regulator the Financial Conduct Authority's 20% threshold.
"Investors have endured more than seven months of suspension so far and it now feels likely that the extension could continue until the end of the year," Suter suggested.
"The M&G property fund is fighting fires on two sides before it can re-open: one on the accurate valuation of its assets and another on the level of liquidity in the fund.
"Investors will be disappointed that no properties have been offloaded since last month's update and there are still £180m of assets either under offer or exchanged on.
"Considering over the past seven months of the fund closure there has been almost £150m of assets sold, there could be a long road to go before there is sufficient cash to re-open."
M&G promises 'fresh action' on underperforming funds
While no further transactions were completed in the past 28 days, M&G said a number of its tenants had returned to paying their rents on a monthly basis. It said that 71% of the fund's billable rent and service charge for June had been collected, up from around 66% in April, adding income returns would continue to be influenced by the level of rental income received from tenants.
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