M&G’s property debt vehicle set to close with over €175m

M&G rakes in further €35m as 13 mezzanine funds get set to raise capital

M&G is 10 weeks away from a final closing of its real estate debt fund. 175m. By its final closing its investor base will be a mix of European and offshore capital, said John Barakat, head of real estate finance at M&G.

The fund can provide up to 80% financing as part of an M&G “one-stop solution”, he added, to tackle what he called the biggest issue for borrowers: “Whether there are senior lenders that will allow there to be junior loans behind them, and will intercreditor terms be acceptable to both lenders?” M&G is also looking at senior debt on a stand-alone basis.

“The senior loan market offers attractive relative value. We have an increasing appetite for senior mortgage risk,” he said. Pramerica’s mezzanine debt fund has also held a final closing, raising £492m from institutions thought to include US, Middle Eastern and Canadian investors. APG and US-managed accounts of Prudential had already committed £150m.

CB Richard Ellis reports that 13 mezzanine funds are raising capital, two of which will target stretched senior loans up to 75% loan-to-value; at least seven will focus on value-added deals up to 85% LTVs; and four will target deals with LTV levels up to 90%. The Cairn Property Debt Fund, a partnership between Eurohypo, Cairn Capital and Schroders, is in the first camp and is said to be on target to raise around £70m at a first closing in Q2.

Meanwhile, Wilson Lee’s First Growth Real Estate Capital has arranged €80m of senior and mezzanine debt for Groupe Colbert to buy a 50% stake in the Mercuriales Towers in Paris.