One of the UK’s biggest property funds, which owns shopping centres across the country, has alarmed investors by banning withdrawals and blaming both Brexit and the retail downturn for its problems. The £2.5bn M&G Property Portfolio was suspended after “unusually high and sustained outflows” – demand from investors for their money back – prompted by “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”. Nearly £1bn has been withdrawn by investors from the fund over the last year. M&G PLC (MNG) admitted it had been unable to sell commercial property fast enough to fund the rush for the door by investors, leaving it with no choice but to block further withdrawals. The fund’s biggest holdings include shopping centres such as Fremlin Walk in Maidstone, Kent, where House of Fraser is one of the biggest tenants, the Gracechurch centre in Sutton Coldfield, where stores include House of Fraser, Topshop and New Look and the Wales designer Outlet in Bridgend, home to retailers including Marks & Spencer and Next.
The fashion brand Quiz (QUIZ) has made a £6.8m loss after sales fell across its high street store chain and concessions, forcing the retailer to warn of further store closures. Quiz, which operates 246 UK stores and concessions, reported a year-on-year sales slump of 11% across its UK retail estate in the six months to the end of September. The share price of Quiz, which reported a £3.8m profit in the same period last year, slumped by 16% in early trading. The company said: “The trading conditions on the UK high street have remained very challenging. A continued reduction in footfall across the group’s standalone stores and concessions have resulted in a sustained and weaker than initially anticipated negative like-for-like [sales] performance.” The high street sales slump prompted Quiz to review its UK retail estate and take a £7m non-cash charge to take into account issues such as onerous leases until it has a chance to renegotiate terms or shut stores.
The Metro Bank (MTRO) chief executive is to step down only two months after the departure of the longtime chairman. Craig Donaldson, who has been in the role since the lender was founded in 2009, agreed to leave at the end of the month after leading it through a “challenging period” after the revelation of a significant accounting error in January. Dan Frumkin, who has been with the bank for only three months, will take over as interim chief executive. He joined Metro Bank from the Bermuda-based bank Butterfield and previously worked at Royal Bank of Scotland and Northern Rock. The announcement of Donaldson’s departure comes weeks after Metro Bank’s founder and chairman, Vernon Hill, resigned with immediate effect.
M&C Saatchi (SAA) share price plunged after the advertising agency admitted its accounting scandal was much worse than previously thought and issued a second profit warning in less than three months. The embattled group, which has clients including O2 and Sky in the UK, said that after an external review by PricewaterhouseCoopers, it would be taking an £11.6m hit. When the scandal was revealed in August, the company said the charge would be £6.4m, prompted by “overaggressive” revenue recognition at its UK operation. The “misapplication of accounting policies” also extends to areas including understating project costs, wrongly listing assets on the balance sheet such as obsolete software, or overstating the value of assets such as fixtures and fittings.
