Property #investors that have taken note of the number of largest investment companies that are increasing their attention on property as a full-fledged #investmentstrategy will have without doubt had their ears perk up at the news that M&G, formerly the #investment management division of #Prudential (divested in 2019), is once again making strides in the world of property investment with the launch of a new European fund.
With the stated purpose of "investing in purpose built living accommodation, we can provide more homes that meet the needs of today's renters," the M&G 'European Living Property Fund' has raised €578m in capital, with funding coming from Dutch asset managers MN (€400m) and the Prudential With Profits Fund (€178m).
The fund is specifically targeted to invest in student housing, private rented sector, and retirement homes providing investors with index-linked rental income, exposure to #houseprices, and geographical diversification.
CIO of M&G Plc, Jack Daniels, stated that "expanding the reach of our residential capabilities into continental Europe is a natural progression, building on the experience and expertise we have developed over the past decade in the UK". However the question many investors interested in the UK market should be asking is, "what does the opening of this European fund, say about the UK market".
This question arises because while M&G's UK counterpart has already provided around 3,500 rental homes and made a €75m maiden #investment in 124 refurbished apartments in Finland as part of their UK residential property investment strategy, it has not been without challenges.
In the second half of 2019 the fund imposed restrictions on withdrawals from the UK Property Fund (which includes British retail parks, offices, and industrial property).
At that time the fund said they temporarily blocked investors from removing their cash until it had raised enough money to meet withdrawal demands but, as of Jan of 2023 its 'Secured Property Income Fund' was still deferring redemptions. This deferral remains a result of pressure on the firm to sell assets, as some institutional investors, including large pension schemes, have decided to cut their exposure to property.
If you are a UK investor, the shift to a European fund while the M&G UK fund continues to have a redemption deferral in place, this could convince a more risk averse investor from avoiding the UK market at this time.
Sources:
M&G raises €578m for new European property fund | https://www.investmentweek.co.uk/news/4062459/raises-eur578m-european-property-fund
M&G UK Property Fund shuts door on investors wanting cash | https://www.thetimes.co.uk/article/property-fund-shuts-door-on-investors-wanting-cash-tsmklj2qt
BlackRock and M&G defer withdrawals from UK property funds | https://www.reuters.com/markets/blackrock-defers-withdrawals-uk-property-fund-2023-01-04
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