M&G Investments is a global asset manager with a long history investing and innovating across both public and private markets.
As an active manager we build solutions around what matters most to our clients whether it be investing for growth or income, to meet future liabilities, protect capital or invest responsibly.
Together, through a strong sense of partnership and collaboration, we support a culture of continued innovation to build long-term relationships as needs evolve over time.
We offer access to a broad range of capabilities that span both public and private assets including fixed income, equities, multi-asset, real estate, infrastructure and private equity.
Globally we manage over £271 billion (at 30 June 2020) on behalf of individual and institutional investors including pension funds, endowments and foundations, insurers, sovereign wealth funds, banks and family offices.
We’re part of M&G plc, an international savings and investment business with the ambition to deliver long term value for our investors, while working together to create a more positive future.
Strategic corporate development
Our real estate strategy over the near term is aligned to our overall corporate strategy which is to provide active high-value investment solutions to our clients, in more markets and through a wider range of structures. Key pillars in the growth strategy:
- Customers: building our business around them and using our experience and insights to meet their needs;
- Distribution: expanding the range of propositions and the channels through which we deliver them;
- Investments: producing good outcomes for customers through our expertise and innovation;
- Merger and transformation: creating a simple, digitally enabled business with lower costs focused on customers.
M&G Real Estate is well-positioned for growth, being one of the most international of UK-based real estate investment managers. We seek to grow our assets under management in a profitable and sustainable manner by offering a focused range of globally scalable funds and strategies to meet the investment requirements of our clients and attract new sources of institutional capital to the business. We will shortly be launching a European Living fund and a Shared Ownership fund to provide investors with more options in the alternative space with a low correlation to both commercial real estate and other asset classes.
INDUSTRIAL: The logistics sector has shown resilience through the pandemic, backed by growth in e-commerce and rising demand for short-term leases to stockpile or store unsold inventories. Over the longer term, increas- ing e-commerce adoption, upgrade demand and potential reshoring of key manufacturing inputs or processes should act as tailwinds for rents and capital values for high quality modern logistics situated within close proximity to key transport hubs. Developed APAC markets with a relatively large domestic population and low availability of prime modern logistics assets, such as Tokyo, Osaka, Sydney, Melbourne and Seoul should outperform over the medium to longer term.
OFFICE: The pandemic has provided APAC businesses the opportunity to test telecommuting among workers on a wide scale, resulting in increased discussions around the future of the office sector. While it is still early days to draw a firm conclusion, offices are not expected to become obsolete given that they remain an integral platform for employees to collaborate, exchange knowledge and develop trust. Furthermore in APAC, space constraints in dwelling areas coupled with differentiated workplace cultural norms will likely limit the scale of remote working adoption amongst businesses. Nevertheless, COVID-19 has accelerated ongoing structural changes, including corporates increasing focus on digitalisation, business resilience and employee wellness, which may impact overall demand for office space. Prime and high quality office buildings situated in office markets where vacancies are at record low levels and new supply is limited such as Seoul GBD and Osaka will likely remain resilient over the medium term.
RESIDENTIAL: Multifamily residential in Japanese gateway cities is expected to remain resilient on the back of high occupancy rates, resulting in stable income streams. Occupancy is unlikely to decline significantly as white-collared employment continues to be healthy and many are working from their homes. Over the longer term, the preference for inner-city living in Japan should remain undeterred as better job opportunities and a wider range of amenities will likely make cities including Tokyo and Osaka more attractive to Millennials and Generation-Z. Hence on the back of accelerating demographic trends, coupled with healthy submarket fundamentals, the sector is expected to continue providing higher risk-adjusted returns going forward.
RETAIL: COVID -19 has accentuated the weakness in the brick-and-mortar retail landscape, resulting in occupiers expediting store consolidation plans. As stringent travel restrictions are expected to remain in place, high street retail areas that are largely dependent on tourist arrivals and the sale of discretionary goods, such as in Hong Kong, Tokyo’s Ginza district, Osaka’s Shinsaibashi and Seoul’s Myeongdong, are likely to see rental corrections over the next 12–24 months. Suburban shopping centres in dense neighbourhoods in Singapore and Australia are expected to be more resilient given convenient location, and that more are working from home.
Investment principles & strategy
Our investment philosophy and approach is built around the needs of long- term, income focused capital and is shaped by decades of experience managing the assets of insurance companies and pension funds which make up 89% of our AUM. Investment decisions are informed by proprietary forecasts and market insight from an experienced global research team.
We believe that:
- Income is the primary driver of long-term returns. We target and proactively manage assets which can generate sustainable, growing income streams.
- A balanced portfolio diversified by geography and asset type enhances risk adjusted returns over the long term.
- Real estate markets are inefficient. Using proprietary research and financial models we identify and exploit mispricing at asset class, real estate sector and individual asset levels.
We aim to provide commercial real estate mortgages to borrowers secured against a range of different investments, including income producing, transi- tional and development assets.
Moreover, we are strongly focused on self-originating debt that allows us to achieve attractive risk-adjusted through:
- Origination – direct origination of loans to maximise negotiating power .
- One-stop-shop – reduce execution risk. Provide senior and junior debt in a single whole loan solution.
- Hold-to-maturity – a buy-and-hold investor.
- Funding large transactions – average ticket of £100m+.