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M&G launches first investment in European long lease property

19 February 2016

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M&G Investment has launched a new fund offering pension funds and other investors the opportunity to invest in European real estate.

The M&G European Secured Property Income Fund will build on the firm's UK experience.

Its first investments totalling EUR 100 million are in the leisure and retail sectors in Belgium and Portugal, with exchange on two further deals in Germany and Ireland expected shortly and further opportunities "under review".

M&G Real Estate chief executive Alex Jeffrey, says: "Long lease property is an established asset class in the UK, but is not as widespread in Europe, and this innovative fund will enable investors to access an evolving opportunity at a time when the European economy is improving."

"Having invested in Europe for over 15 years, we are bolstering our investment capability and expanding our footprint across the region to provide clients access to quality real estate with long term value."

The new fund's immediate pipeline is worth EUR 130 million and the portfolio dynamics will evolve as further deals are completed.

The new fund is M&G's first foray into Portuguese real estate through a portfolio of supermarkets, which have been sold by and leased back to Sonae, Portugal's leading food retailer.

The investment in Belgium is for a David Lloyd health and racquets club in Brussels, which follows a deal for around GBP 350 million, announced in January 2016 for the chain's UK clubs.

M&G has 15 years' experience of investing in UK long lease real estate, launching its M&G Secured Property Income Fund in 2007 for third-party investors.

Fixed income chief executive for M&G Investments, Simon Pilcher, says: "A new European financing landscape is emerging following the financial crisis, where pension funds and institutional investors, the natural owners of long term capital, are providing long term finance where banks previously dominated the market.

"European companies are beginning to seek alternative ways to raise finance, with sale and leaseback being an increasingly popular option so launching this fund is the natural next step."

First published 19.02.2016

Lindsay.sharman@wilmingtonplc.com