JAPAN - AXA Real Estate Investment Managers has stepped up its activity in the commercial real estate debt markets by launching a specialist vehicle focusing on property financing opportunities in Japan.
The fund manager has raised ¥15bn (€130m) for its Japanese Commercial Real Estate Debt fund from a Japan-based AXA Group insurance company and is seeking to secure further investment from other AXA insurance companies and third-party institutional investors.
AXA Real Estate says this brings its total global real estate debt investment capacity to more than €2.7bn.
Most of this capital is earmarked for the European debt markets, including the €530m raised for its pan-European Commercial Real Estate 1 fund. But the new fund shows the company has also identified Japan as offering attractive opportunities in the space.
AXA Real Estate said it was still a "long-term believer" in the Japanese economy and the underlying fundamentals of its real estate markets, despite recent tragic events in the country.
Frank Khoo, global head of Asia at AXA Real Estate, said: "The resilience of the Japanese people and the speed and efficiency with which they have been dealing with the situation is an inspiration to us, and we are pleased to make our support clear.
"The Japanese economy, as a whole, will recover in a relatively short space of time, at which point the underlying imbalance of supply over demand in real estate lending will be the same as before.
"The fact that many banks in the region still have limited capacity to lend on commercial real estate remains unchanged, and this presents a clear opportunity for us to satisfy some of the significant demand in the region, while delivering value for our investors."
The new fund will be able to invest - through investments in trust beneficiary interests - in loans of between three and 10-year terms, longer than can typically be provided by local banks, on a competitive floating or fixed rate basis with spreads between 200 and 250 basis points above the Tokyo Interbank Offer Rate.
It will focus on newly originated senior loans, which are backed by prime commercial real estate assets located in the Greater Tokyo region, either directly or as part of a syndicate behind a bank. The loans will benefit from a full package of securities including mortgages.
Lending is restricted to a maximum of 65% of the underlying asset value. The vehicle will also consider buying existing loans in the secondary debt market, although that will not be the main focus of the investment strategy.