M&G Real Estate has completed an initial close of its first value add fund – the M&G UK Enhanced Value Fund (UKEV) with investor commitments totalling £125 mln (€141 mln).
Managed by Paul Crosbie, UKEV is a seven-year, close-ended fund aimed at institutional investors in the UK, Europe, Asia Pacific and Canada.
M&G said that the initial funding includes a 'significant' commitment from an Asian investor and added that it expects to invest a total of £500 mln on behalf of the fund by 2021.
Investing in core, supply-constrained locations such as London, the South East and the big six UK office markets, UKEV will target mispriced assets valued at between £15-75 mln, taking advantage of the risk aversion created by current political uncertainty. Value will be added by repositioning and redeveloping assets and by exercising change of use and lease enhancement methods.
'Despite the uncertainty surrounding the outcome of Brexit, the UK’s economic and market fundamentals remain robust,' said fund manager Paul Crosbie. 'UK commercial real estate continues to benefit from significant macro trends such as e-commerce and urbanisation, which are driving tenant demand. Whilst the supply of quality space remains severely limited, we believe this creates an exciting window of opportunity to refurbish and reposition assets.'
Alex Jeffrey, Chief Executive of M&G Real Estate, added: 'To exceed our target first close in such a short space of time is credit to the team.'
