M&G suspends property fund as Brexit and retail landscape take toll

M&G, which counts Fremlin Walk in Maidstone among its biggest holdings, said the move to suspend its £2.5bn property portfolio came following “unusually high” demand from investors for their money back, prompted by “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”.

Approximately £1bn has been withdrawn by M&G investors over the past year. The company admitted it had been unable to sell property fast enough to fund the withdrawals.

M&G made a similar move in the wake of the EU referendum in 2016, shutting its fund from July to November that year, preventing investors from withdrawing their cash.

The latest closure has sparked concerns among investors that a similar shakeout of the property market could be on the cards.

In 2016, funds worth a total of £35bn were forced to close their doors.

M&G said the latest suspension would buy it time to sell off assets to help pay for future withdrawals. It did not say when the fund would be reopened.

Last month, retail property experts at Knight Frank wiped £76m off the value of M&G’s retail assets as demand for shopping centres and retail parks dries up.

M&G’s investments are focused heavily on retail parks, which have not been immune to the structural changes impacting the sector.

The out-of-town locations suffered a 2.3% increase in store vacancies during the first half of 2019, according to figures from the Local Data Company.