M&G buys first Swedish asset for Europe long lease strategy

By Paul Norman - Friday, March 09, 2018 13:32

M&G Investments (“M&G”) has bought a care and assisted living home in Visby, Sweden in a €15m deal.

The newly developed home has been acquired from Magnolia, a listed Swedish property company, which specialises in developing care homes, hotels and student accommodation across Sweden.

A 25-year lease has been agreed with the Municipality of Gotland that will provide M&G’s investors with long-term income growing in line with inflation.

It is the latest transaction on behalf of the €350m M&G European Secured Property Income Fund.

Launched two years ago, the Fund offers pension funds, insurers and other institutional investors income growing in line with inflation through investment into real estate leased to tenants over the long term.

The Fund has completed nine transactions in seven countries across a combination of traditional and alternative sectors, including retail, hotels, offices, residential, leisure and now healthcare. The fund has invested a third of its capital in Germany, has contracted lease terms ranging from 14 years to in excess of 100 years and a gross portfolio yield of 4.9% as at 31 January 2018.

Ben Jones, fund manager, M&G Investments, said: “Many of our pension fund and insurance clients continue to seek long-term exposure to real estate but through de-risked income driven strategies. Not only do long-lease assets provide this, they also generate income that increases in line with inflation. This transaction in Sweden is a good example of providing our clients with these investment characteristics and enables the Municipality to provide high quality accommodation and facilities to benefit the community.

Peter Riley, deputy fund manager, M&G Real Estate, said: “This is our first acquisition in Sweden on behalf of the Fund. With a competitive and diversified economy and a stable economic outlook, the country is one of our primary targets. With additional capital to deploy we continue to seek high quality long lease transactions across a broad range of countries and sectors within continental Europe.”

Since its launch, the Fund has completed nine transactions across 38 assets in seven counties, including:

• Germany: €43.1m deal with Motel One located in a prominent location in Berlin

• Freehold interests with over 100-year leases in Germany – a hotel in Munich let to NH Hotels and residential units in Halle, East Germany

• Sonae supermarkets: five Portuguese supermarkets, leased to Sonae MC, the market leading food retailer in Portugal.


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