M&G Iberia is part of M&G Investments, which has 89 billion worth of private assets, from which the real estate segment forms part.
This year, Federico Bros, Head of Iberia at M&G Real Estate, was present in Cannes, at MIPIM: one of the most important international events dedicated to the real estate sector. The conference programme addressed the most important trends of the moment, such as the importance of ESG criteria, flex space and affordable housing.
Aligned with these themes Federico Bros shared with Iberian Property the M&G Real Estate strategy for the next couple of months. Read it below!
What is M&G in Iberia? What kind of assets, and which kind of location compose your portfolio?
M&G Iberia is part of M&G Investments, which has 89 billion worth of private assets from which the real estate segment is part. M&G Real Estate has globally 39 billion of assets under management, and we are a long-term investor with a longer perspective especially in Europe where we have a bit more than seven billion of assets under management, placing us in the top ten of major investors in real estate in Europe.
In Iberia we have almost 1 billion assets under management, from which 70% corresponds to Spain, and the remaining 30% to Portugal.
We have invested in the last years in different type of asset classes, and as a philosophy all M&G funds have a pan-European footprint – Iberia represents between 20-25% of our continental Europe exposure, together with Italy as we look to these countries as the Southern Europe region.
Basically, M&G has 7 offices in Europe with a team of around 30 people in Iberia, with the company planning to grow the department in Europe.
In Portugal we have: 1) retail assets, in which we consider the “retail defensive” segment, meaning hypermarkets and supermarkets – where we partnered with Sonae Sierra, the current local leader in activity; 2) an office building with Fidelidade as a tenant, an asset which we are planning to submit to an extensive refurbishment.
In Spain we are very focused on logistics, having more than 350.000 sqm under management most of them located in the community of Madrid. We also have an important presence in the Retail High Street and Offices segments, although we are currently seeing more opportunities in the Living sector.
M&G has been investing with a core fund since 2006, which has been progressively growing. To get a clear picture, just in the last 18 months it has invested more than 1 billion euros. Note however that part of the portfolio is also composed by long term leases that show a very good governance behind it.
In the Living sector what kind of cities and product are you searching for?
We are open to all different classes, so now location is our main driver. We look at Lisbon and Madrid as the key cities to enter, potentially with Barcelona as well. In second-tier cities, in Portugal we are studying the possibility to invest in Porto, and in Spain there are 4 cities which stand out: Seville, Bilbao, Malaga and Valencia.
In any city our criteria stand in the relation between quality-supply and demand, and we can either invest in PRS (Private Rented Sector – stock already in existence) or in BTR (Build to Rent). Either way, ESG credentials will be one of the main factors affecting the decision on which model to follow. To give an example, M&G has successfully invested in Living in Helsinki, Finland, by reconverting an office building into residential, which is now on the top of European most energy efficient residential buildings.
Municipalities new affordable housing programs – Does this represent an opportunity? Or on the contrary doesn’t have a substant impact?
This can be easily perceived as a “tick in the box” for institutional investors. Affordable housing is very much aligned with our strategy in the sense that it has a clear pact on the “S” of ESG, because affordable rents translate directly in social impact. We have been following the updates of the Plan Vive in Madrid for example, and if we decide to follow these programs our strategy will rely on partnering with local developerswith a solid track record, and we have the flexibility to carry both forward purchases and forward fundings.
