M&G Real Estate has launched a European property strategy that has attracted significant backing from MN of the Netherlands and an internal fund client.
The M&G European Living Property Fund is a European expansion of its £1.3 bn (€1.5 bn) UK Living strategy.
In a statement, the company said it aimed to provide institutional investors with ‘attractive risk adjusted returns’ through investment into Europe’s residential sectors – student housing, single and multifamily housing and retirement living.
In a major success, the investment manager is working with MN, one of the biggest pension fund administrators and asset managers of Dutch pension funds. MN, which is diversifying and internationalising its residential exposure, is committing €400 mln to the fund.
Meanwhile, an internal client of M&G has committed €178 mln as part of its move to upweight in European alternatives.
‘This is a natural progression of our successful UK Living strategy,’ said Alex Greaves, head of UK and European Living at the fund manager.
Marcus Eilers, head of European residential, will lead the expansion into the European living sector from M&G’s Frankfurt office.
M&G explained that increasing the ‘availability of low-carbon and energy-efficient housing’ across Europe formed a key tenet of its net zero pathway, adding it was one of the founding signatories of the Better Buildings Partnership Climate Change Commitment seeking to achieve net zero carbon across its global portfolio by 2050.
For the new European residential push, it is seeking investments with selected developers and property owners sharing a vision for high quality, sustainable homes that support wellbeing, sustainability and community.
Updating the market, M&G also revealed it had made a debut investment for the strategy - a €75 mln deal in Finland for a landmark Art Nouveau building that will be home to 124 premium serviced apartments in central Helsinki, at the heart of the Katajanokka district – 5 minutes’ walk from the central business district.
A mix of retail outlets at ground level is a direct result of a survey carried out with local residents and includes restaurants, grocery stores and health and beauty outlets. Recently refurbished to a high standard, it has achieved the highest LEED Platinum score in its class in Europe and the second highest in the world in the same category.
Commenting on MN’s investment in the M&G European Living Property Fund, Joep Barten, portfolio manager, real estate, said: ‘By increasing exposure to residential real estate in Europe, we aim to secure long-term returns for our clients, PMT and PME. The focus on sustainability and the fund manager’s long track record played an important part in placing this newly committed capital.’
Eilers said: ‘With clear supply/demand imbalances across Europe’s residential spectrum, we have a vast landscape of opportunity and a chance to combine a resilient – and mostly inflation-linked asset class – with geographical diversification. We are looking to acquire highly ESG-accredited assets in locations with strong underlying demographics to deliver compelling returns for our clients.’
