M&G Investments has reached the first close of its latest vintage of real estate debt funds, raising £350 mln (€411 mln) of capital from four clients.
The firm said the capital will be deployed into real estate loans across Europe originated by M&G’s real estate finance team.
The latest funds raised £200 mln from LGPS Central Limited, £100 mln from the Prudential With Profits Fund and £25 mln from one of the UK’s largest insurers.
M&G said it will be raising further capital for these funds and segregated mandates over the next 18 months from global institutional investors seeking potentially double-digit returns available from direct commercial real estate loans in Europe.
Dan Riches, real estate finance, M&G Investments, said: ‘We are pleased to reach the first close of our latest funds with strong support from a number of cornerstone investors. Rising interest rates have contributed to a reduction in property valuations, providing investors accessing this asset class now with lower debt bases and subsequently greater downside protection and preservation of capital.
‘We continue to see very attractive risk adjusted returns in the sector. European and Asian investors have been increasing allocations to private market investments and debt that benefits from being secured against real assets and is currently offering compelling returns relative to other asset classes.’
M&G’s real estate finance team is part of the firm’s £74 bn private markets business. Established in 2008, it has become one of the biggest alternative lenders in Europe, providing senior, junior and whole loans secured against core assets through to speculative developments for pension funds, insurance and institutional clients.
