M&G Investments (Real Estate)

Corporate overview

M&G Investments is an innovative active asset manager investing €358bn across fixed income, equity, real estate and multi-asset strategies in the UK, Europe and Asia. M&G Real Estate manages over €44.5bn in assets and employs c.280 people across 12 offices globally, as at 30 September 2022. M&GRE invests through a range of long-established core real estate pooled funds and bespoke strategies through separate accounts and joint ventures. Our investment-led culture focuses on the delivery of long-term returns through targeting and proactively managing assets with sustainable, growing income streams, enabling us to successfully diversify our investor base.

Through our range of pooled funds, segregated mandates, and joint ventures, investors have unrivalled access to compelling investment solutions in global real estate and real estate finance. We offer senior and mezzanine debt across the UK and continental Europe, either on a standalone or combined basis, making us one of the few asset managers to offer a directly originated, ‘one-stop’ solution for borrowers.

We help investors achieve better outcomes by accessing superior investment opportunities and strong risk-adjusted returns. We aim to have a positive impact on society and our ESG investment team play a fundamental role in ensuring this. Using our resources to enrich the lives of people and communities by creating world-class places to live and work. We are committed to achieving net-zero carbon across all our real estate assets by 2050. In 2022, over 75% of our assets under management received a four-star or higher rating in the Global Real Estate Sustainability Benchmark (GRESB) survey.

Strategic corporate development

M&G Real Estate’s business strategy is to offer a focused range of globally scalable funds and strategies, which are made available to the widest array of institutional investors globally. M&GRE is positioned as a market leader in pan-regional core European and Asia Pacific funds as well as in UK and European long-income funds. We also maintain a market-leading position with our funds in the UK and European residential private rented and shared ownership (affordable housing) sectors. We aim to grow assets under management through winning new third-party capital and diversifying our investor base with our existing offerings as well as launching new products in areas where we have a competitive advantage and where there is a market opportunity to build a new franchise.

To support this growth, we have expanded our distribution plat- form, placing dedicated real estate resource in the US and Germany. Furthermore, we are expanding our footprint with additional hires in local offices in Europe and Asia Pacific. We are also growing our residential team to support expansion. Finally, we actively seek co-investments, JVs and other capital solutions in conjunction with existing clients in Europe and Asia, and we plan to increase resource within our Capital Solutions business line.

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 over 85% 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 returns 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+.

Performance verification

M&G Real Estate funds are GIPS compliant, but the performance is not GIPS verified. They are also in line with INREV standards.

_{COMPLIANCE STATEMENT}

_{The services and products provided by M&G Investment Management Limited are available only to investors who come within the category of the Professional Client as defined in the Financial Conduct Authority’s Handbook. They are not available to individual investors, who should not rely on this communication. Information given in this document has been obtained from, or based upon, sources believed by us to be reliable and accurate although M&G does not accept liability for the accuracy of the contents. M&G does not offer investment advice or make recommendations regarding investments. Opinions are subject to change without notice. M&G plc, a company incorporated in England and Wales, is the direct parent company of The Prudential Assurance Company. The Prudential Assurance Company is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.}

Asia logistics property: A boost in return potential?

2023-03-13T13:30:00Z

Asia Pacific e-commerce growth continues to outpace the rest of the world, supporting demand for more and modern logistics property in the region. Real estate price adjustments as well as emerging investment opportunities could further boost return potential.

Homing in on income growth potential in real estate

2023-02-08T14:26:00Z

Real estate markets may have entered a new phase in the cycle as revaluations play out. Yet positive structural drivers continue to underpin several subsectors. As such, we believe prospects for income and growth remain robust in the medium term.

The Investment Podcast: Dissecting the real estate and recession dynamic

2023-01-19T12:10:00Z

With a third of the global economy expected to fall into recession in 2023 according to the IMF, Jose Pellicer considers previous recessions of 1991 and the Global Financial Crisis, as well as the price of risk during economic contraction and the countries and sectors that could be in favour.

Turning towards the next best period of performance for real estate?

2023-01-09T11:24:00Z

Repricing will emphasise variation in performance of portfolios, depending on quality of assets. But it could also create the next period of best performance for new investments, since history shows it is often in the years post-recession that real estate delivers.

Real estate living: A key opportunity of the next cycle?

2022-12-19T15:20:00Z

While living sectors are not immune to the impact of rising interest rates, long-term rental growth prospects remain attractive. Housing is a fundamental need, and the UK’s housing shortage is palpable. Current pressure on yields could therefore create a key buying opportunity.

Global Real Estate Outlook: Steering through volatility in the search for value

2022-11-30T14:49:00Z

In our latest Global Real Estate Outlook we explore the structural and cyclical challenges impacting traditional property sectors, how portfolio allocations may shift, and the need for skill and perspective to steer through ongoing volatility in the search for value. Risk aversion is discernible, but history has shown that real estate often delivers the best vintage of investments in the years after recession.