Deals

M&G makes Luxembourg debut with €71m office buy

The London-based investment arm of Prudential said it has targeted Luxembourg for the first time because of the country’s impressive investment volume projections and office take-up statistics. 

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M&G Real Estate, the London-based investment arm of Prudential, has made its first move in the Luxembourg real estate market with the purchase of an office asset for around €71 million.

The real estate investor bought the 122,000 square foot Da Vinci office building from Frankfurt-based property firm Union Investments.

The asset is located in the airport district of Luxembourg and comprises five floors of office space, as well as additional facilities. Long-term tenants include the State of Luxembourg, Lombard and Bain Capital.

A spokesman for the firm said Luxembourg offered “very positive” macro-fundamentals, with employment growth and GDP in the country predicted to be among the strongest in Europe over the next five years.

The firm also said office take-up last year was 20 percent higher than the five-year average, with demand driven by the banking and business services sectors. It also said that a compelling factor was that investment volumes in the Luxembourg market reached their highest level since the crisis in 2007.

M&G did not provide precise performance targets for its latest acquisition but a spokesman for the firm said it did expect to achieve “relatively attractive returns and good performance” from this asset.

“With office employment growth and GDP likely to be one of the strongest in Europe over the next five years in the city,” said David Jackson, fund manager at M&G Real Estate. “Luxembourg is a strong financial center and obvious investment choice as we continue to bolster our presence in Continental Europe,” he added.

M&G Real Estate said it acquired the asset on behalf of its €2.2 billion pan-European core growth strategy, M&G European Property Fund. Over the last 12 months the firm has deployed around €700 million of capital, with acquisitions made in Denmark, France, Germany, Italy and Portugal.

One of the most recent deals made on behalf of the fund was the May purchase of a Berlin office building for around €94 million.

In the last 12 months, M&G has also completed real estate investments for a range of assets in Stockholm, Rome, Paris, Barcelona and Copenhagen, totaling around €530 million, on behalf of the vehicle.