AXA Investment Managers – Real Assets (AXA IMRA) intends to underwrite up to €3 bn of loans in Europe and the US this year, Timothé Rauly, head of CRE finance and core funds at AXA –IM Real Assets (AXA IMRA), has told PropertyEU.
'This would be similar to the €3 bn we underwrote last year,' he said. 'For us, the most important thing is to look at the relative-value perspective when it comes to identifying lending opportunities and to be flexible. Our minimum loan size is typically around €50 mln. The largest loan we have underwritten so far was for €400 mln. However, we will also consider club deals.'
AXA IMRA announced on 19 January that it had raised around €1.4 bn for its latest commercial property real estate senior debt fund, Commercial Real Estate Senior 10. The latest fund is the tenth generation of AXA IMRA CRE senior funds, bringing its total debt platform to €13 bn. However, the new fund is the first to have an initial mandate to invest in US loans, with an allocation of up to 25% to capitalise on the growing US economy. AXA IMRA has invested in the US real estate debt space since 2014 on behalf of its separate mandates and as part of its wider expansion into the US market.
'We have seen a recent move upwards in 10 year Euro-mid-market swap rates from 30 bps to 70 bps, which could make it easier for debt funds to find interesting positions to invest in,’ said Markus Kreuter, head of debt advisory services at JLL in Frankfurt. 'There is a lot of capital in place for debt funds and a great willingness to do deals, although there are not enough investment opportunities to meet demand.'
AXA IMRA’s latest fund will target senior debt opportunities in the office, retail, logistics, light industrial and some alternative asset class sectors, such as healthcare, according to Rauly. Its annual target return is 200 bps over the 3-month Libor rate.
'The new fund - Commercial Real Estate Senior 10 – has been designed to match our investment capacity within the next 12 to 18 months,' Rauly said. 'The size of commitments received shows both the confidence in our ability to deliver strong returns to investors via the debt markets, whilst also demonstrating the growing appetite for commercial real estate debt.'
Although AXA IMRA has up to three years to deploy the capital for its latest fund, it is hoping to fully invest it within the next 18 to 24 months, Rauly said.
The decision was taken to add the US into the mix to reflect the fact that investors are looking for appropriate risk return investments, Rauly said. 'We've been extremely selective and adding the US was a way to ensure that we would be able to offer strong returns in the long-term to our investors.'
Commercial Real Estate Senior 10 will primarily target European markets such as Germany, France and the UK, although the fund's remit allows the group to invest anywhere in Europe, including Southern Europe and Scandinavia.
Interestingly, the fund's lending remit reflects AXA IMRA's own acquisition remit. For example, last year, AXA IMRA invested €800 mln in alternative real estate in Europe, setting a new high for the group. Last month (December), AXA IMRA completed the acquisition of a portfolio of 17 healthcare assets in Western Germany from real estate funds managed by Blackstone for around €310 mln. The deal was made on behalf of a consortium comprising AXA Insurance Companies its two retail funds, AXA Selectiv Immo and AXA Selectiv Immoservice.
AXA IMRA had over €70 bn in AUM, including €54.1 bn in direct property and infrastructure and €12.7 bn in real asset finance as of end of September 2016.
