M&G Investments has raised a further €168m for its mezzanine debt fund at its third and final closing, bringing its total equity to €343m. Placement agent First Avenue Partners helped rally investors for the fund, which at the end of March collected €35m of equity from two European pension funds at its second closing.
A range of European and US institutions have now committed to the fund, which is seeking double-digit, unleveraged returns over its seven-year life. It will provide junior loans against all property types across Western Europe, including the UK, Germany and Spain, and plans to issue two loans in July.
So far, seven investments have been made across the office, retail and industrial sectors. M&G provides both mezza-nine debt and senior debt on deals and considers loans with loan-to-value ratios of around 80%. It is also looking at providing senior debt on a stand-alone basis. “We help borrowers reduce their execution risk by being able to give them a single source for both senior and junior debt,” said M&G’s head of real estate finance John Barakat.
“Commercial real estate debt offers great value relative to other fixed-income assets, so our appetite is definitely increasing. “On the investing side, we are working on acquisitions, refinancings and debt restructurings directly with borrowers and banks. We’ve also been purchasing performing loans.” M&G manages more than €122bn in fixed-income assets, including €5bn in European commercial mortgages, plus nearly €17bn in direct real estate investments through PRUPIM.