AXA IM Alts is attracting about twice the amount of capital it can accommodate for a new European life-sciences real estate fund.
The AXA European Life Science Strategy fund will be built around the Kadans life-sciences platform acquired late last year for €500m and is seeking to raise €750m.
The New Mexico State Investment Council (SIC) revealed in a recent board meeting that the amount of capital interested in the fund is about twice as much as AXA IM Alts’s capital-raising target.
The US sovereign wealth fund has approved a €50m commitment but told IPE Real Assets it did not know how much of this would make it into the fund. A final close for the fund is expected in July or August.
AXA IM Alts would not comment on the fund. In November last year, John O’Driscoll, head of European transactions at AXA IM Alts, said the acquisition of Kadans was a “unique opportunity to access a fully integrated platform comprising an existing operational portfolio and an extensive development pipeline”.
The capital raised will give all third-party investors combined a 40% stake in the closed-ended fund, with the balanced owned by AXA Group investors.
Kadan currently owns assets in the Netherlands, UK and Germany, and AXA IM Alts plans to expand the platform within these countries and into other European markets, including Spain, Belgium, Switzerland and Nordic countries.
New Mexico SIC said 30% of its commitment would go to funding the existing portfolio and pipeline of developments.
It will be the first time that New Mexico SIC has invested with AXA IM Alts, and the sovereign wealth fund said it would complement its investment in the Blackstone’s life-sciences real estate fund, which is predominately US-focused.
In a board meeting report, New Mexico said the new fund was “a unique opportunity to invest in one of the leading European vertically integrated life-science platforms”.
“Life-science office is a growing sector supported by strong demographic and technological tailwinds. The sector requires specialised knowledge and skills with regard to items such as building design and tenant requirements that create barriers to entry and can ultimately lead to higher rental growth and better tenant retention.”
New Mexico expects net returns from the investment to be comparable with value-add strategies – of 10% to 12%, using financial leverage of up to 50%.
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