Commercial: London M&G sees “high-end” recovery in London’s West End as it strikes deal on prime retail assets September 12th, 2024 Deividas Krupstas M&G announces that it has extended a sizeable commercial real estate loan secured against a multi-million pound portfolio of super-prime central London retail assets in Mayfair including the Gucci store at 144/146 New Bond Street and a significant portion of retail and residential assets on St Johns Wood High Street. It reflects the rebound in investor confidence and a continued recovery in valuations for assets in London’s fashionable prime retail markets. M&G’s Real Estate Finance team has a long-term relationship with the sponsor, Trophaeum Asset Management, having initially struck a deal in 2016.The deal takes place against a backdrop of sharply rebounding occupier demand in central London luxury retail. With tourist numbers for the UK back to pre-pandemic levels and overseas spending at its highest in six years, reduced vacancies in the capital are setting the scene for a return to rental growth in the sector. Average central London rents are now rising at circa 3.6% per annum – their strongest pace for about six years and are anticipated to continue this upwards trajectory, particularly for prime properties. Rents at the luxury end rose by 13.9% year on year, driven largely by Bond Street, with scarcity of high-quality units on prominent streets a contributing factor. M&G Real Estate also has strong conviction in the strength of the West End’s real estate recovery and economy generally through developments it already has underway with robust sustainability characteristics to meet growing demand from occupiers for best in class office space. Both the £200 million Tottenham Court Road office scheme and the major modernisation of The Ribbon, a £250 million, 80.000 sq ft mixed use scheme benefit from large retail offerings.Dan Riches, Head of Real Estate Finance at M&G Real Estate, says: “London remains a top shop till you drop destination for tourists and the prime retail real estate market is benefitting from a strong rebound as luxury brands bag desirable spots on some of the world’s most famous destination shopping streets. We have a long-standing relationship with the sponsor and this deal is testament to the strong portfolio of assets that have been acquired and effectively managed over a number of years.”Deepan Khiroya, MD for Trophaeum Asset Management UK, says: “We look forward to working with M&G with the renewal of our excellent working relationship across these assets. We too have experienced resilience in demand across our trophy assets and we continue to create luxury retail and office accommodation and strong destinations for our client base”.M&G’s £73 billion Private Markets business comprises six core centres of excellence of which M&G Real Estate is one of the world’s largest property investors with more than £40 billion in assets under management covering both real estate equity and debt strategies*. M&G Real Estate’s platform provides global market insight and the ability to deliver a variety of compelling strategies to clients. Established in 2009, the Real Estate Finance team has deployed more than £13 billion across the UK and Europe, investing on behalf of more than 100 institutional investors in the UK, Europe and Asia both pooled strategies and segregated mandates.
