The development is set to provide 48 residential units with on-site leisure amenities and feature the work of the international interior design firm Yabu Pushelberg.
The loan will be invested and held by funds managed by M&G.
Dan Riches, director of real estate finance at M&G Investments, said: “We have worked extremely closely with Lodha over the past 12 months to ensure the delivery of the development of this historic site in central London.
“Lodha has proven to be a highly capable counterpart with a deep understanding of this market and has assembled a top-tier project team for the development of No 1 Grosvenor Square.
“M&G’s direct origination model gives our institutional investors direct access to prime real estate, such as No 1 Grosvenor Square.
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“Our unique ability to invest and hold large loans on the most complex of transactions has proven extremely attractive to borrowers and provides us with more opportunities to create value for our investors.”
As of 6th October 2017, M&G’s real estate finance team had invested more than £7bn in commercial mortgages in the UK and Europe.
“Private credit investments have become increasingly sought after by institutional investors seeking higher returns than are available in more liquid markets,” Dan added.
Lodha purchased the site in 2014 and received consent from Westminster City Council for its complete redevelopment in 2015.
Ab Shome, director of finance at Lodha UK, added: “We are delighted to be supported by M&G Investments to fund the delivery of this unique development.
“M&G’s size, stability and long-term outlook make them the perfect funding partner for such a significant and prestigious project.”
The scheme is scheduled for completion in December 2019.