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Barings Announces £250m Real Estate Mandate

Bank of England

Barings has announced a £250m real estate debt mandate with The Phoenix Group for its matching adjustment portfolio.

In partnership with Phoenix, Barings will build a portfolio of investment grade buy and hold UK commercial mortgage loan assets across a range of commercial property sectors, including industrial, residential and offices across Greater London and regional locations. The facilities will have a term of between five and 50 years and Phoenix will look to match the cashflows and duration of the assets against the profile of its annuity liabilities.

Barings has already agreed its first deal for the new mandate, a £30m first mortgage loan on a 30 year term secured against a mixed used office and retail property on Tottenham Court Road, London, with a loan to value below 50%.

Barings head of real estate debt for Europe & Asia-Pacific Sam Mellor said: “To have secured this mandate with a leading institution such as Phoenix is a reflection of the strength of our real estate business in Europe. We have steadily built a strong track record in the space and the ability to source off market opportunities as well as draw on our expertise as an owner and developer of real estate assets positions us well.

He added: “We are extremely pleased to be partnering with Phoenix as they build their exposure to this asset class. The insurance market is strategically important to our business and we have a long history of managing capital for insurers, with Phoenix’s focus on customer outcomes and sustainability aligning closely with our own priorities. The Phoenix mandate also aligns with our wider UK debt strategy targeting loan sizes of between £30m and £200m and diversified across the UK geographically and by asset class. As the banks retrench from the UK lending market, we continue to see a healthy pipeline of opportunities. Through this relationship we look forward to delivering strong returns to match Phoenix’s liabilities. Our performance in 2020, despite the challenging market environment, has put us in a good position as we look to grow our loan book this year in the UK and across Europe.”

The Phoenix Group head of manager oversight James Mitchell added: “We are delighted to establish this partnership with Barings with the first deal for this UK Real Estate Debt mandate. The Barings team’s experience and expertise in this asset class were clearly differentiated during our selection process and we are looking forward to working with the team to help facilitate our growing needs in this asset class. Our ability to work with our Asset Management Partners to deliver high quality UK Real Estate Debt assets is only increased with the addition of the Barings partnership.”