Investment firm M&G, which owns shopping centres across the country, has announced that it is temporarily suspending dealing in shares of its £2.5bn M&G Property Portfolio fund with immediate effect.
“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 fund’s customers by applying a temporary suspension in dealing.”
The fund’s biggest holdings include shopping centres such as Fremlin Walk in Maidstone, Kent, the Gracechurch Centre in Sutton Coldfield and the Bridgend Designer Outlet in Wales.
Jonathan de Mello, head of retail consultancy at Harper Dennis Hobbs, said: “M&G have an extensive retail property fund, but the bulk of their stock tends to be placed in more ‘challenged’ high streets, and these have been hit massively by the large volume of company voluntary arrangements and administrations we have seen over the past year, as well as practically every other retailer seeking to reduce rents.
“M&G’s suspension is a desperate measure, but will only help them in the very short term. In fact, it may be worse for them overall, as it will draw significant adverse attention to the quality of their stock, and it is very likely that investors will exit at an even more rapid rate once trading resumes.
“M&G’s issues are the first sign that property funds are materially starting to feel the pain that retailers have been feeling for years. It is pain that can only get worse for those funds that own buildings or centres in locations that are in decline from a retail perspective. Some property companies – for example, NewRiver – are performing well against this tough backdrop, but they tend to be the exception rather than the rule.”