EUROPE - AXA Real Estate Investment Managers has attracted strong interest in its first European real estate development fund in six years and expects to be able to raise at least €600m by September.
Four European investors have committed €230m - along with co-investment from insurance companies of the AXA Group - to AXA REIM's Development Venture III, which follows two antecedent funds launched in 2001 and 2004.
The fund manager expects to raise even more in its second closing, which it will cap at €600m.
The opportunistic fund, which is targeting a gross internal rate of return (IRR) of 25%, is one of the first development funds to raise capital following the credit crunch and suggests investors are keen to position themselves for a recovery in the development markets.
Eric Stampfli, development funds director at AXA REIM, said: "The launch of this development fund at this stage in the market cycle will enable us to deliver both speculative and pre-let assets into targeted markets where we see restricted supply and strong tenant demand, offering the potential for strong value creation for our investors."
The fund will invest in green and brown field sites, existing properties that require extensive redevelopment and development joint ventures.
It will target offices predominantly, but will also look at retail, logistics, hotels and mixed-used real estate.
Individual development projects are expected to have a minimum end value in excess of €300m.
The main geographical focal points will be Paris, London, Milan, Madrid and major German cities.
AXA REIM will make use of its specialist local development teams in each of these markets.
AXA Real Estate has a pan-European development team of more than 25 people located across major European cities, responsible for managing all stages of the development process, from sourcing and deal execution to engineers and architects.
The development team has completed more than 250 projects with a combined value in excess of €7bn over the last 10 years, including 15 major corporate headquarters.
The two previous funds completed in total more than €2.3bn of developments across Europe, providing its investors with IRRs in excess of 40% a year on a project level.
Dennis Lopez, global chief investment officer at AXA REIM, said: "Development Venture III builds on the highly successful track record of our two previous development funds, which have provided our investors with exceptional returns.
"With a well established in-house team of professionals experienced in managing every stage of development, we will seek to secure a broad range of opportunities, ensuring we retain an appropriate risk profile for the fund."
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