M&G Real Estate is financing the construction of 230 apartments in Bad Homburg vor der Höhe as its first private rented sector (PRS) deal in Germany.
The manager has agreed the funding deal on behalf of M&G European Property Fund, as part of the €4.4bn fund’s expansion into residential markets across continental Europe.
The deal marks the fund’s first residential acquisition in Germany, bringing its investments in the country to more than €1bn across the retail, office and logistics sectors.
The fund will finance three out of the seven construction sites within the Victoria Gärten development, which is located within easy reach of Frankfurt’s central business district.
Thomas Kächele, director of investment and asset management at M&G Real Estate for Germany, said: “During the COVID-19 pandemic, the residential sector has demonstrated its resilience across most markets in Europe, with Germany leading the list of the go-to markets and investment volumes into the country holding up year-on-year.
“The pandemic has also shifted the debate on the traditional work-life equilibrium, with living spaces best configured for home working being increasingly sought-after. Bad Homburg has excellent connections to the city and is an area where demand for good quality homes is increasing steadily.”
David Jackson, manager of M&G European Property Fund, said: “Victoria Gärten is our first residential acquisition in Germany, a key step in the fund’s expansion into Europe’s residential markets, boosting the portfolio’s diversification between different countries and economic cycles within the continent.
”This is our fifth European residential acquisition in the last 12 months, bringing the Fund’s exposure to the sector closer to our target of 20%. We expect this growth to continue in the coming months, given our current pipeline.”
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