UK - M&G Investments has arranged senior, mezzanine and preferred equity financing for two London shopping centres that sit above Hammersmith and Fulham Underground Stations.
The fund manager is in an unusual position in being able to provide real estate financing across the capital stack from senior debt - normally the preserve of banks - to mezzanine debt, and to source preferred equity from outside parties.
The senior debt was sourced from separate account clients, including Prudential insurance company, and BayernLB.
The junior debt was provided by M&G's Real Estate Debt Fund, while the preferred equity came from private markets specialist Partners Group.
John Barakat, head of real estate finance at M&G Investments, said: "This transaction demonstrates the benefit of being able to offer borrowers a 'one stop' solution to their financing needs.
"We have invested approximately £450m (€516m) of client capital in senior and junior mortgages in the past four months, and with the shortage of debt, we are adding significant new capital to the market."
The M&G Real Estate Debt Fund, a mezzanine vehicle with US and European institutional investors, provided all of the mezzanine finance.
The fund, which had a final closing in June, has now deployed approximately 40% of its €343m of client commitments. These include financings of high-quality retail outlets, offices and hotels primarily in the UK and Germany.
Barakat added that mezzanine debt was beginning to appeal to a broader range of pension funds.
"It's not universal, but there's more appetite than there was 12 or 18 months ago," he said, adding that most investors in M&G's mezzanine debt fund were in fact pension funds.
Partners Group, which provided the preferred equity, said the investment was consistent with its strategy to "invest in high-quality properties with unique locations and solid fundamentals".
Claude Angéloz, partner and co-head of private real estate at Partners Group, said: "In this transaction, we were attracted by the defensive characteristics of the two properties that benefit from high footfall and strong cash flows secured by long leases and a diversified base of high credit tenants.
"Given the high demand for space in these two locations, the assets provide significant upside potential for our clients."
