AXA Real Estate has bought a core office building in Luxembourg for its Italian institutional Caesar fund.
The fund manager said it paid Deka Immobilien €32.2m for the Monnet 6 property in the Kirchberg area of Luxembourg.
The deal is the fund’s first in the Grand Duchy.
Guy Van Wymersch, head of Benelux at AXA Real Estate, said the Kirchberg district was characterised by a “remarkably low vacancy rate of 1.8% and strong rental growth, appealing to an increasing number of international companies”.
The Caesar fund, for Italian institutional investors, has now invested €326.5m across Europe.
AXA said the fund was buying “well-let, core office buildings” on the edge of central business districts in main European cities.
At its last close in late 2012, the fund raised €209m in equity from 12 Italian institutional investors alongside AXA insurance companies, giving it a total potential fund size of €415m once fully invested.
The fund, which has a nine-year life, last year bought office properties in Helsinki and is looking to achieve an average annual dividend of 5.5% on invested capital and an internal rate of return of 9%.
In May, AXA Assicurazioni and AXA MPS made commitments to a new, separate Italian fund that has the option of investing abroad.
The fund, which has an initial investment capacity of €350m, could invest up to €700m in European commercial real estate directly or through funds.
AXA Real Estate also manages the Core Italian Properties Fund for Italian institutional investors.
