M&G claims first real estate fund of its kind for Europe

BelgiumM&G Investments has raised €265 million for a continental European real estate “sale and leaseback” portfolio that includes properties in Belgium and Portugal.

The firm says it is exporting an investment strategy from the UK and into Europe through the first fund of its kind.

The M&G European Secured Property Income Fund is the “first” pooled institutional fund to invest in long-lease Continental European real estate. It is aimed at institutions.

The fund uses a sale-and-leaseback technique, also known as “long lease” investing, where a company with operating assets unlocks the value of its real estate, usually as an alternative to bank financing, while securing its long-term occupancy.

Alex Jeffrey, chief executive, M&G Real Estate, said: “Long lease property is an established asset class in the UK but is not as widespread in Continental Europe.”

The fund’s immediate €130 million pipeline provides investors with a gross yield of 5.8% from leases to tenants, which are 100% linked to inflation with a weighted average term of 34.5 years.

Its first investments, totaling €100 million, are in the leisure and retail sectors in Belgium and Portugal. Exchange on two further deals in Germany and Ireland is expected shortly and further opportunities are under review.

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