M&G Investments has provided a five-year whole loan to finance the recent acquisition of a Scottish retail park by an Orion Capital Managers fund.
The private equity firm’s Orion European Real Estate Fund IV bought the Kingsgate Shopping Park in East Kilbride, south of Glasgow, in November 2016.
The property was bought from Aviva Investors for £89.9 million (€103 million), which reflected a net initial yield of 7 percent, according to a Q4 2016 report on UK retail warehouses from real estate consultants Cushman & Wakefield.
M&G did not disclose the size of the loan. The lender is known to consider lending to a loan-to-value ratio of up to 85 percent and provides senior, junior, whole loan and development finance, as reported in Real Estate Capital’s Top 40 European Lenders report in October.
Kingsgate Shopping Park is fully leased to 12 tenants including Sainsbury’s, M&S, Homebase and Next.
“This retail park is in an excellent location close to Glasgow, providing a catchment of over 600,000 shoppers,” said Dan Riches, director for real estate finance at M&G.
“Institutional investors seek commercial mortgages as an attractive alternative to bonds as the investment can offer good relative value for secured risk. The entire whole loan will be invested and held by funds managed by M&G,” Riches added.
M&G’s Real Estate Finance team has invested about £6.5 billion in commercial mortgages in the UK and Europe.