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: Logistics space has been a beneficiary of the structural shift to online shopping, a trend accelerated by the pandemic. Given this boost to e-commerce, the outlook for industrial occupational demand is much more resilient than for other commercial property space. Investors are likely to continue targeting industrial assets, although they should be careful not to be complacent. Yields have compressed significantly over the last few years, and the sector is far from bulletproof. With the highly uncertain economic envi- ronment we find ourselves in, poorer quality industrial assets in secondary locations face weaker rental prospects and an elevated risk of vacancy, particularly if let to businesses operating in industries more vulnerable to the ravages of the economic crisis that COVID has wrought.
OFFICE: A headline reporting the ‘death of the office’ is sensationalistic hyperbole, but what is likely is that part of the pandemic’s legacy will be a new normal of flexible working. This means offices must provide what homeworking struggles to. Corporate occupiers will become more selective, with successful office space being that which best enables interaction and collaboration, to foster relationships, innovation and productivity. The effectiveness of such offices may be reduced in the short term due to social distancing requirements, but longer term we expect occupational – and investor – demand to focus on prime buildings in centralised hub locations – these will have the biggest draw for employees venturing out of their homes to go to work.
RESIDENTIAL: During these uncertain times, investors see even more clearly the appeal of the defensive characteristics and diversification that the residential Private Rented Sector (PRS) provides, in both the near term and long term – we can shop without going to a shop, we can work without going to an office, but we still have to live somewhere! The supply/demand imbalance in many markets helps ensure that occupancy and rents will be resilient even through this tough economic period. Other residential opportunities which have been increasingly on investor radars include senior living and purpose- built student accommodation (PBSA), where despite short-term challenges presented by the pandemic, long-term demand fundamentals remain robust.
RETAIL: Lockdowns and other restrictions put in place to combat Covid-19 have dealt a cruel blow for bricks-and-mortar retail, which was already facing significant challenges from the shift to e-tailing – a trend which has been accelerated. In the near term, high street retail areas largely dependent on tourism and discretionary goods sales are likely to see the biggest hit. Grocery-orientated retail schemes should prove the most resilient. In the longer term, secondary retail, which has little ‘destination appeal’, has the biggest struggle lying ahead. The sector’s rental outlook is far from bright, although yields have been rising to reflect the weaker prospects and bigger risks.
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, transitional 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+.