Long lease real estate

Investment in long lease real estate offers investors fixed income-like cashflows derived from long-term contractual rental payments. It also retains the security and capital growth potential from owning the underlying real estate.

The asset class of long lease real estate can therefore be viewed as a hybrid of fixed income and real estate.

Long lease real estate investment provides long-dated, inflation-linked cashflows that are underpinned by owning real assets. Investors therefore benefit from:

– secured fixed income-like cashflows

– the potential for capital value growth over the long term

Is long lease real estate a growth or matching asset class?

In our view it has elements of both. Long lease real estate has the potential for closing funding gaps, whilst matching liabilities.

Long lease real estate can also offer good relative value versus all of its closest comparators: traditional real estate, corporate bonds and index-linked gilts.

M&G has been investing in long lease real estate since 2000 and currently invests over €7.7 bn* in this asset class. We benefit from the experience of our parent company, Prudential Plc, which has invested in real estate for over 140 years.

We also have significant resources, with an experienced team of real estate professionals and one of the largest, in-house credit teams in Europe.

Our extensive expertise and track record in both the real estate and fixed income asset classes have enabled us to successfully implement our long lease real estate product range.

*As at 31 December 2018.

Please follow the links below for more information on M&G’s long lease real estate product range:

– M&G European Secured Property Income Fund (Euro SPIF)