June 2011

First Avenue was lead placement agent in raising €343m for M&G's real estate mezzanine debt fund with a final close end June 2011. Investors were large institutions in UK and USA, with strong backing from several leading real estate and investment consultants.

Commercial real estate debt offers great value relative to other fixed income assets. Capital, especially for anything other than prime assets, remains scarce, so borrower receptivity is high.

This Real Estate Debt Fund seeks attractive unlevered returns over its seven year life by providing junior commercial loans against all property types in western Europe, particularly in the UK.

Seventeen investments have been made so far, including transactions in the UK, Germany and Spain. The portfolio includes loans on office, retail and industrial property but hotel and student accommodation transactions have also been considered.

With many traditional bank lenders seeking to reduce their real estate exposure, insurance companies and pension funds can help fill the 'funding gap' reported widely in the market. M&G helps borrowers reduce their execution risk by being able to give them a single source for both senior and junior debt.