M&G Real Estate has looked to the thriving food sector in the south of France for its latest round of acquisitions on behalf of two of its European property funds, M&G European Property Fund and M&G European Secured Property Income Fund.
In separate deals worth a combined €124 mln, M&G Real Estate has acquired two hypermarkets leased to Casino Group, one of France’s largest food retailers, generating secured long-term income from established assets.
The transaction comprises the Géant Casino hypermarket of La Valentine, located in Marseille, the country’s second largest city behind Paris, as well as a Géant Casino hypermarket located in the municipality of Mandelieu-la-Napoule nearby Cannes. Both sites are located within established retail areas, alongside brands such as H&M, Castorama, Ikea, Fnac and Decathlon, and within a short distance of a number of well-populated residential areas.
Antonin Prade, director of investments for M&G Real Estate in France, said: 'The French food market has remained resilient throughout the Covid-19 pandemic, with overall supermarket sales growing by more than 5% in 2020. In this context, we consider well established, strategically located, food-anchored hypermarkets as a defensive asset class consistent with our core strategy. On top of this security, the excellent relationship that we built with a high quality tenant and partner such as Casino Group will be key to guarantee future rental income but also to improve the ESG credentials of the properties purchased, and therefore secure their value in the long run.'
Marc Reijnen, head of investments and asset management for M&G in Continental Europe, added: 'Grocery real estate has proven to be among the most stable commercial real estate asset classes in Europe over the past few decades, and despite an uncertain economic environment, the medium-term outlook on yields for high-quality stock with consistent income remains solid across Europe. In this context, we consider these acquisitions to offer an appealing discount to very sought sectors like logistics and will help the respective Funds’ performances.
Given their size and liquidity, both funds will continue to increase their exposure to France - one of the Funds’ primary target countries - not only through the food sector, but also through the living, logistics and office sectors, providing further geographic and tenant diversification to our portfolios.'
With €4.4 bn under management, the M&G European Property Fund is one of the largest, most diversified open-ended Europe ex-UK funds. The fund is invested across twelve countries and is characterised by a core, low risk investment strategy. The principal real estate sectors in which the fund will invest are offices, retail, logistics and residential.
With €700 mln of GAV as at August 2021, the M&G European Secured Property Income Fund is the first and largest long income vehicle in Continental Europe.
