AXA Real Estate raises €588.5 million for European Development fund

AXA Real Estate Investment Managers announces the final close of its pan-European development fund, Development Venture III, having raised €588.5 million of total equity. The Fund has so far invested in one prime office development project in London and three in Paris.

DVIII, which will have up to €2.5 billion of development capacity after leverage and reinvestment of proceeds, attracted a broad range of investors comprising pension funds (54%), insurance companies (24%), sovereign wealth funds (14%) and funds of funds (8%) from North America (19.5%), the Middle East (17.0%) and countries in Europe (63.5%) including the UK, The Netherlands, Germany, Finland and France.

Additionally 65% of the total equity was raised from investors in AXA Real Estate's previous two Development Venture Funds, which together have completed in excess of €2.3 billion of developments, providing its investors with IRRs in excess of 40% gross p.a. on a project level.

DVIII aims to achieve opportunistic project level IRRs by investing in green and brownfield sites, existing properties which require extensive redevelopment. It will utilize the significant experience of AXA Real Estate's pan-European development team which has completed circa 250 projects with a combined value in excess of €8 billion over the last 10 years, including 15 major corporate headquarters.

Laurent Vouin, Head of Opportunistic Funds at AXA Real Estate, commented: "To have raised such a significant sum for AXA Real Estate's third development fund is a strong endorsement of both our development team's track record of creating value for clients and the compelling nature of the projects we are currently progressing, particularly considering the fact that we raised over €350 million in 2011, in challenging economic conditions.

"DVIII is already invested in four projects and, while we are focused on the delivery of these schemes, we also intend to seize new opportunities for this fund."

"Alongside our development management activities for DVIII, we will continue to work with our clients, either as single investors or in clubs, to assess the high quality investment opportunities we are able to source from our European network.

"We are already beginning to see a strong pipeline of potential investments which play to our skills across the full development spectrum, ranging from land or speculative developments through to refurbishments, and we expect to see a further increase in such opportunities in 2012 as real estate markets continue to adjust to the new economic environment."

Denis Morel, Senior Fund Manager of Development Venture III, added: "We have a number of very exciting and high quality projects in the Fund, including Sixty London in the City of London and the new Coface headquarters in Paris, and these are currently progressing well to ensure delivery at an optimum time in the market cycle."

"I am particularly pleased by the fact that 65% of the equity raised for DVIII came from investors in our previous two Development Venture Funds. The fact that they also chose to increase their allocation shows how we are able to develop and grow strategies alongside clients.

"This no doubt contributed to the fact that this third Fund was able to raise €588.5 million, compared to €405 million and €200 million the last two times respectively, and demonstrates the trust our clients have in our ability to source, execute and create value from developments."

Source: FTI Consulting

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