M&G acquires stake in European property firm, betting on recovery.

M&G has acquired a stake in a European property firm, demonstrating its confidence in a market recovery. This investment aligns with M&G's strategy to enhance its real estate portfolio and leverage opportunities in the evolving property sector. The move reflects optimism about the future of European real estate, positioning M&G to benefit from potential growth as the market rebounds.

British insurer and asset manager M&G (MNG.L) has acquired a majority stake in European real estate investor BauMont as it prepares to increase its commercial property holdings in anticipation of a market recovery. M&G informed Reuters that it secured a 65% stake in BauMont Real Estate Capital, which comprises an 18-member property investment team with offices in London and Paris, managing assets worth 1.5 billion euros ($1.6 billion).

Based in London, M&G has the option to fully acquire BauMont within the next few years. The company has also invested 200 million euros in BauMont's latest real estate fund, which aims to target properties such as offices, rental homes, and logistics facilities. M&G opted not to disclose the financial details of the transaction.

The global commercial property markets have been disrupted by rising borrowing costs and increased vacancies in post-pandemic office spaces. However, there are indications that the market may have hit a bottom in certain countries, including Britain. M&G Asset Management Chief Executive Joseph Pinto stated that the acquisition would aid the company in expanding its real estate business internationally and strengthening its broader private markets division, which manages 73 billion pounds ($95 billion) in assets. "It is important to internationalise even more; that's critical," Pinto emphasized to Reuters.

Founded in 2017, BauMont owns various commercial properties in the UK and France. The firm focuses on 'value-added' strategies, targeting slightly riskier assets that may require redevelopment to enhance their appeal to tenants or buyers.

BauMont is expected to "selectively" acquire office properties in London and Paris and has recently purchased an office building in the City of London, which it plans to modernize, according to Tony Brown, Global Head of M&G Real Estate. "European real estate markets are adjusting to the higher rate environment and are entering a new cycle of growth," Robert Balick, managing partner at BauMont, stated in a press release. While BauMont will operate independently of M&G, it will have access to M&G's support functions, the firm noted.

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Source: Reuters‍