M&G Real Estate plans debt and income products, plus further resi buys
M&G Real Estate, as PRUPIM will be renamed from June, has a European secured property income product, two debt funds and more residential investment in its sights.
The name change coincides with the departure of Martin Moore. He has been handing over to new chief executive Alex Jeffrey, who joined M&G from MGPA last year.
Funds and products for external property clients have been marketed under the M&G PRUPIM parent brand for many years, although they are managed by the PRUPIM team, sometimes jointly with M&G.
The property investment management arm of M&G Investments has £17bn invested in mainly UK property.
Jeffrey said: “There certainly has been some confusion about the different names. We are using ‘real estate’ in our new brand, which is the first time M&G has chosen a sub-brand for one of its asset classes.
“It is to show the specialist expertise we have in property and it blends the 150-year-old PRUPIM name with M&G’s reputation as an active investment manager.”
Jeffrey stressed that “there won’t be any change to our strategy or operations, but it is fair to say we are becoming closer to the M&G family”.
He said PRUPIM was seen as “a passive allocator of capital rather than an operator” in some quarters.
“PRUPIM has been associated for many years with long-term, cautious investing – and we are not moving away from that. However, the ingredient we think M&G brings is an active, operator approach to real estate investing.”
The new chief executive’s target is to expand the firm’s capital invested on behalf of external clients, which currently stands at about £5bn.
This compares with the £12bn managed for internal clients such as Prudential and Scottish Amicable life fund.
The £5bn of external client investments includes retail money from investors in the daily-priced PAIF, the £2.15bn M&G Property Portfolio Fund, as well as from third-party institutional clients.
Jeffrey said the target was to lift external capital under management from 30% to 50%.
Similarly, the strategy is to increase the proportion of overseas assets from 20%, or about £3.5bn, to 50% of a bigger business in five years’ time.
The group’s two overseas funds are the M&G European Property Fund, “which has performed well and continues to grow”, said Jeffrey, and the M&G Asia Property Fund.
Jeffrey said he envisaged the fastest growth overseas in Asia, where the $1.5bn M&G fund was already the largest core open-ended property fund in the region.
The Singapore-based team has been augmented with the opening of new offices in Tokyo and Seoul this year.
M&G to scour Continent in quest for long-dated income
“There is significant demand from investors outside and inside the UK for inflation- linked, long-dated income and we are investigating a number of options in continental Europe,” said PRUPIM chief executive Alex Jeffrey.
Jeffrey also announced recently that PRUPIM plans to open an office in Germany – it has had a Paris team for a year.
The firm’s UK long-dated income product, the M&G Secured Property Income Fund, has grown to £1.35bn since its launch in 2007
It is managed jointly by PRUPIM and the M&G fixed income division.
The fixed income division leads the business’s investments in property debt, under John Barakat.
M&G invests for Prudential in senior debt and for in-house and external clients in mezzanine debt via the Real Estate Debt Fund.
Jeffrey said fund raising continues for both a follow-on mezzanine fund and for a ‘stretch senior’ fund. “Following our investments this year in the Genesis and Berkeley portfolios we are also definitely very focused on residential,” he added.