M&G Real Estate holds £125m initial close for value-add fund

M&G Real Estate has completed a £125 million ($175 million) initial close of its first value-add fund, M&G U.K. Enhanced Value Fund (UKEV).

UKEV is a seven-year, close-ended fund aimed at institutional investors in the United Kingdom, Europe, Asia Pacific and Canada. Initial funding includes a significant commitment from an Asian investor and a total of £500 million ($700 million) is expected to be fully invested by 2021.

Investing in core, supply-constrained locations such as London, the South East and the big six U.K. office markets, UKEV will target mispriced assets valued at between £15 million ($21 million) to £75 million ($105 million). Value will be added by repositioning and redeveloping assets and by exercising change of use and lease enhancement methods.

“Despite the uncertainty surrounding the outcome of Brexit, the U.K.’s economic and market fundamentals remain robust,” said fund manager Paul Crosbie. “U.K. commercial real estate continues to benefit from significant macro trends such as e-commerce and urbanization, which are driving tenant demand. Whilst the supply of quality space remains severely limited, we believe this creates an exciting window of opportunity to refurbish and reposition assets.”

M&G Real Estate is the real estate fund management arm of M&G and is a leading global real estate investor with over £30 billion ($41.9 billion) invested in a broad spread of properties across Europe, North America and the Asia Pacific region.