AXA Real Estate Investment Managers ('AXA Real Estate'), the leading real estate manager in Europe with over 42 billion of assets under management as of June 2012, announces a new round of fund raising to bring its total Commercial Real Estate ('CRE') debt program to 7 billion by the end of 2012.
AXA Real Estate aims to secure around 2 billion of additional investment capacity by the end of 2012, having already received around 1.4 billion commitments from investors.
In addition to targeting existing and new investors in its core markets of the UK and France, AXA Real Estate will concentrate its marketing efforts in Germany, the Netherlands, the Nordics and Switzerland, where it has identified a strong appetite from investors wishing to invest in one of the few senior lending products which provides them with diversification out of their domestic markets.
The new tranche of fundraising follows 1.3 billion of investments made by AXA Real Estate in the first half of 2012. This significant volume of transactions has enabled the company to increase its investment target to 2.4 billion for the full year, compared to the 2 billion target it set in January.
40% of the loans made in the first half were primary loans while 60% were secondary transactions, with the most notable being the 800 million portfolio AXA Real Estate acquired from Société Générale in June.
AXA Real Estate believes that its commercial real estate debt platform, established in 2005, is now one of the most advanced and largest of any the real estate investment managers currently active in the CRE loans market in Europe.
This size and geographic scale is a key differentiator which allows AXA Real Estate to
acquire sizable portfolios in the secondary market, underwrite large transactions of up to 200 million on the primary market (and consequently to access loans backed by prime large properties), deliver proper diversification and optimize its management platform and deal more efficiently with technical issues inherent to the asset class.
Offering attractive and predictable returns with an investment grade bond-like risk profile, senior CRE loans are viewed by large institutional investors as a compelling way to diversify their fixed income allocation, especially in an environment of historically low yields generated by supposed 'safe haven' government bonds.
AXA Real Estate's regulated entity, AXA REIM SGP, advises it on debt investment activity.
Isabelle Scemama, AXA REIM SGP's Head of CRE Finance, commented: "To be able to operate most effectively in the real estate loans market I believe that having a platform of sufficient size and scale is of critical importance, both in terms of accessing transactions, as well as the ongoing management of the debt. Our unique positioning provides our clients with a tested and proven investment structure that has the capacity to access the highest quality transactions while our co-investment policy guarantees a strong alignment of interest between all our investors.
"We are proud to see that our strategic vision to be the first mover in the senior space is now being rewarded with repeat clients and new investors joining our platform. Our strategy is endorsed by the number of non-banking financial institutions which have either recently entered the market or expressed an interest in launching similar products. Furthermore, the retreat, and in some instances the withdrawal altogether, of traditional senior lenders in the property market has accelerated further throughout 2012, making the supply/demand imbalance more acute."
Source: FTI Consulting