M&G Investments, one of Europe's leading institutional investors, has arranged senior, mezzanine and preferred equity financing for two shopping centers that sit above Hammersmith and Fulham Underground stations in London. M&G clients invested in the senior and mezzanine loans.
The shopping centers benefit from 'captive audiences' and extremely high footfall driven by their proximity to the transport hubs, as well as strong asset management as evidenced by consistently high occupancy and tenant demand even in the challenging retail market of the last three years. Such assets offer institutional investors high levels of security with a strong, defensive income profile to meet ongoing liabilities.
M&G arranged senior finance, to be funded jointly from discretionary client accounts and Bayern LB. M&G also funded the mezzanine loan from its Real Estate Debt Fund, and sourced the preferred equity investor to complete the transaction.
"This transaction demonstrates the benefit of being able to offer borrowers a 'one stop' solution to their financing needs" according to John Barakat, Head of Real Estate Finance at M&G Investments.
"We have invested approximately £450 million of client capital in senior and junior mortgages in the past four months and with the shortage of debt, we believe we are adding significant new capital to the market."
The M&G's Real Estate Debt Fund, a mezzanine vehicle with US and European institutional investors, provided all of the mezzanine finance. The fund, which had a final closing in June, has now deployed approximately 40% of its 343 million of client commitments. These include financings of high quality retail outlets, offices and hotels primarily in the UK and Germany.