M&G Real Estate’s newly launched European living fund has acquired a residential asset in Spain in a €98m forward-funding deal.

The M&G European Living Property Fund’s acquisition of the 29,000sqm development on Bilbao’s Zorrotzaurre Island marks the PMT and PME-backed fund’s third transaction since its launch in January this year.

The Bilbao development comprises 314 private rental apartments split across two buildings of 15 and 17 floors as well as 360sqm of retail space.

The acquisition also marks the fund’s first investment in Southern Europe following previous deals in Ireland and Finland. The European fund targets student housing, single and multifamily housing and retirement-living assets

Marcus Eilers, the head of European residential at M&G Real Estate, said: “This is the fund’s third deal since launch and sees us diversify into Southern Europe following acquisitions earlier this year in Finland and Ireland.

“There is strong demand for high-quality living space across Europe and we are building on our commitment to provide homes which have a positive impact on their surrounding communities.

“We are actively looking at further opportunities across Europe where we can finance similar projects which will deliver best-in-class living space and help to provide resilient returns for our investors.”

Federico Bros, head of investment and asset management for Iberia at M&G Real Estate, said: “With strong supply and demand imbalances, low levels of vacancy and one of Europe’s less indebted household markets, the Spanish residential sector offers strong fundamentals for institutional, long-term investors.”

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