M&G Investments’ real estate finance team has deployed £2bn of capital in Europe in 2014.
The figure illustrates the institution’s established presence in the European real estate lending market, rivaling some of the largest banks in the sector.
Headed by John Barakat the insurance and pension fund manager’s debt programme invests via two funds, which reached final closings in March this year. The £605m M&G Real Estate Debt Fund II lends mezzanine debt and the £750m M&G Real Estate Debt Fund III provides whole loans. M&G has also raised £1.5bn in external funds to invest in senior commercial mortgages in addition to capital invested on behalf of parent Prudential.
Barakat said: “Since the onset of the global financial crisis, M&G was among the first non-bank lenders to identify investment opportunities in real estate finance. Borrowers like M&G have the ability to offer entire whole loan financing solutions. Going into 2015 we are seeing increasing demand for alternative methods of funding real estate in the UK and continental Europe.”
Its deals have included:
- A £238m whole loan to Northern Trust for the refinancing of a £360m UK portfolio let to small and medium-sized businesses.
- A £70m, seven-year facility for storage company Big Yellow, secured against 15 centres.
- A €140m five-year loan to finance Patrick McKillen and Colony Capital’s purchase of the Jervis Shopping Centre in Dublin.
- A €110m loan held against a portfolio of 1,250 homes in Holland valued at €170m.
- A refinancing of Orion Capital Manager’s Puerto Venecia in Zaragoza.
Separate to the £2bn lent by the real estate finance division, M&G also provided £400m of loans to housing associations during the year. The long-term income generated by housing associations fits neatly with the annuity-style income required by M&G’s policy holders.
In February, M&G completed a £150m financing with the Welsh Government which was distributed to 17 different housing associations for the development of 1,000 social and affordable homes.