10 April 2024
If you are covering the news that L&G UK property fund shareholders have approved LGIM’s hybrid property strategy, please see comment from Oli Creasey, property analyst at Quilter Cheviot:
“The L&G UK property fund has today announced that its vote to convert to a hybrid property fund, owning both direct property and REIT shares, has been approved by shareholders.
“In our view the success of the vote was not a surprise – the hybrid approach makes a lot of sense to us, and will allow the fund to sidestep potential FCA regulations looking over the property fund sector. However, the change will have required a degree of investor education, and the L&G team have done a good job in explaining the proposal to shareholders in the fund.
“The fund will shortly commence the pivoting manoeuvre to move the allocations towards the proposal, and this is where the hard work really begins. In theory, the fund may need to sell approximately half of its existing property holdings to reinvest in REITs, while also maintaining liquidity for shareholders through the transition period, and without being treated like a forced seller by potential buyers. The fund will hope that the change heralds net inflows, which will make the rebalancing easier, but won’t want to bank on new investment to do the job for them. Fortunately, the fund has a highly-regarded management team, who we believe are well-placed to undertake the changes required.”
