UK asset manager M&G has secured £350 million in capital commitments for the first close of its latest real estate debt fund.
The capital, which came from four investors, will be invested in real estate loans across Europe originated by M&G’s real estate finance team.
Thise four investors include UK pension fund LGPS Central and Prudential’s With-Profits fund, which contributed £200 million and £100 million respectively.
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The remaining £50 million came from two unnamed investors, including a large UK insurer.
The fund has been launched to capitalise on changes to the real estate financing market.
Once dominated by banks, alternative lenders now account for 39% of the outstanding debt in the €1.5 trillion market.
“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,” said Dan Riches, real estate finance, M&G Investments.
“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.”
