M&G Investments has made one of the largest senior loans seen this year, at a high margin said to be more than 400 basis points.
UK insurer Prudential’s fund management arm advanced all £266m of a senior loan to Round Hill Capital for the private equity group’s acquisition of Nido Student Living.
Round Hill Capital, set up 10 years ago by former Morgan Stanley Real Estate Funds executives, is believed to have paid Blackstone £415m for the business.
The deal is further leveraged with £80m of mezzanine from hedge fund Och-Ziff, putting gearing at more than 80%.
M&G declined to comment on the margin or other details of the agreement. The term for both loans is five years.
Round Hill is thought to have first lined up US insurer AIG to lend the senior debt. M&G stepped in to take over, committing to the deal within two weeks.
John Barakat, M&G’s head of real estate finance, said: “To be able to write large individual loans gives us a unique position in the market and that translates into attractive returns for our investors and certainty for borrowers.”
Nido owns three London student accommodation blocks containing 2,507 beds, in King’s Cross, Spitalfields and Notting Hill.