Investors in a £750m real estate fund have been told they must wait three months to withdraw money from the vehicle as it carries out an emergency sale of property assets, according to the Financial Times
The change in policy at M&G’s offshore UK property fund is the latest sign of a growing crisis gripping the real estate sector, says the paper.
The move by M&G comes after weeks of rumours that asset managers were preparing to impose notice periods for redemptions from property funds. The Guernsey-based fund had almost all its money in direct real estate, causing liquidity problems, given the difficulty of selling properties quickly to generate cash.
In a letter to investors yesterday, M&G said the measure was designed 'to manage liquidity in a controlled and prudent manner...by allowing the fund manager 90 days to sell properties to release proceeds to investors'.
There is technically a permanent 90-day notice period on the institutional unit classes of M&G’s fund, although this is 'waived' as long as inflows exceed withdrawals. Many other funds can withstand a greater level of withdrawals because they keep substantial investments in cash and shares.