M&G Investments is to provide a £517 million (€579 million) whole loan for the development of 1 Grosvenor Square in central London.
The loan, which will be invested and held by funds managed by M&G, will be provided to the UK branch of Indian real estate firm Lodha Group.
The residential development is expected to be completed in December 2019 and will provide 48 residential units with on-site leisure amenities. Lodha purchased the former Canadian High Commission’s MacDonald House in 2014 for £306 million and financed the site acquisition with JPMorgan and mezzanine from Apollo. In 2015, the residential scheme was granted a permit for its complete redevelopment.
In May, Lodha also secured development finance for Lincoln Square, its other flagship London residential project. Cain Hoy provided a £290 million bespoke finance package for development.
Grosvenor Square is undergoing a period of significant change. In addition to the development by Lodha, Rosewood has recently been announced as the hotel operator for the redevelopment of the former US Embassy at the western end of the square.
“Private credit investments have become increasingly sought after by institutional investors seeking higher returns than are available in more liquid markets,” said Daniel Riches, director of real estate finance at M&G.
M&G’s real estate finance team had invested more than £7 billion in commercial mortgages as at 6 October 2017 in the UK and the rest of Europe.