M&G European Property Fund Expands Portfolio in Spain

29 May 2018 – Real Assets

M&G European Property Fund has expanded its portfolio with the acquisition of industrial and retail assets in Spain.

The €3bn core European property fund, managed by M&G Investments’ real estate arm, said it bought two industrial and two retail assets for €80m.

The two retail acquisitions are H&M Reyes Catolicos in Granada and Gran Via 68 in Madrid.  Both sites, which total 3,668sqm, are leased.

The industrial sites Teka Logistics Platform and a further asset in the Getafe logistics corridor are both in Madrid. The sites have a combined size of 55,092 sqm.

Fund manager David Jackson, said: “Our latest research suggests the Spanish economy will continue to perform well, with its recovery having accelerated in 2017.

“This extends to the commercial real estate market, where we predict average rental growth in both industrial and retail will range between 3% and 4% per year for the next three years in Madrid.”

Jackson said these new acquisitions fit perfectly with our strategy to increase our exposure to Continental Europe by investing in core assets in strong growth markets.

“We see a strong correlation between the level of rental growth and tourist spend in major tourist destinations across Europe; Madrid and Granada are very good examples of this trend.”

Federico Bros, a director of asset management for Spain and Portugal, said: “We have seen strong demand for high street retail in prime locations across Spain. Both of the retail sites we have purchased are in established locations and offer great rental growth prospects.

“The industrial sector in Spain also offers strong rental growth prospects as online activity accelerates and these acquisitions help us diversify our portfolio in key sectors.”

M&G European Property Fund was launched in 2006, with a mandate to invest in a globally diversified portfolio of assets in mature European markets outside the UK.

Original story: IPE Real Assets

Translation: Carmel Drake

M&G Invests €80M to Strengthen its RE Portfolio

29 May 2018 – Expansión

The real estate division of the London-based firm M&G Investment has decided to bet significantly on the Iberian market, where its exposure now exceeds €500 million. “We are partners of institutional investors looking for core properties in the best locations across Europe. We opened our office in Spain in 2016, but we completed our first operations there a year earlier”, explains Federico Bros, Director of Asset Management for Spain and Portugal.

Its first operation involved the purchase of the former headquarters of Telefónica located on Calle Ríos Rosas (Madrid) and leased to the advertising giant WPP. “It is an example of what we look for, well-located assets with long-term contracts, 17 years in this case. Between the renovation and purchase we will invest €175 million in that property”, says Bros.

After that acquisition came others, such as an office building in Barcelona’s 22@ district and, recently, five operations with a very diverse profile. On the one hand, M&G purchased three commercial assets: two in Madrid and one in Granada. “The premise in Granada, measuring 2,500 m2, is located on Reyes Católicos, the best shopping street in the city”, explains Bros. In the case of Madrid, M&G acquired two retail premises on Gran Vía 68. “We closed this operation in May but we have been negotiating it for months, given that the building was being renovated. A few months ago, a large Tony Roma’s restaurant opened there and Sabadell is going to open its flagship branch in the other premise in a matter of days”, he said.

Similarly, the firm acquired two industrial assets in Madrid, specifically a logistics platform, leased to Teka, in the Corredor del Henares, and another complex in Getafe. Those two sites span more than 55,000 m2. In total, the firm has invested €80 million on its latest operations, channelled through two funds: MEP and EuroSPIF.

More opportunities

Following these investments, the manager is still looking for opportunities in the Spanish market.

“We are involved in several processes, both official and off-market, in Madrid, Barcelona and prime locations in other cities. Spain is a priority country for us”, says Bros.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake