Investment manager AXA IM Alts said on Thursday that its fifth generation development strategy has secured commitments totalling €799 mln during its first closing period.
The equity was raised from five Asian, North American and European institutions including investors into AXA IM Alts’ four generations of previous development strategies.
AXA IM Alts will pursue an opportunistic long-term capital appreciation strategy by implementing a develop-to-trade approach which takes advantage of investor demand for large, high-quality income-producing assets which are future fit and have strong ESG credentials.
The strategy will prioritise opportunities in France, the UK and Germany, but with the flexibility to deploy capital in Europe’s other key real estate centres, capitalising on the differences in timing between individual real estate markets.
It will have flexibility to invest across all asset classes, but will primarily focus on the development of office and residential assets in locations which have shown long-term liquidity and which are set to benefit from urban infrastructure investment. AXA IM Alts believes these sectors offer a compelling investment case characterised by structural supply demand imbalances and are benefitting from mega themes including urbanisation and technology-led changes in how people live, work and play which have been accelerated by the Covid-19 pandemic.
AXA IM Alts believes that the pandemic has already led to further polarisation in favour of prime new offices that meet occupiers’ requirements for high quality, flexible office space aligned with future working habits at the expense of older stock, where physical and functional obsolescence will be accelerated.
High quality residential development, through new-build projects and the conversion of old office stock, will remain one of AXA IM Alts key conviction calls. The firm said that it will seek to develop build-to-rent assets especially for middle-income and affordable ‘real economy’ homes.
AXA IM Alts’ fifth generation development strategy is a continuation of its approach to undertaking large-scale and high-profile developments in major cities across Europe, building out its portfolio of core assets. AXA IM Alts has completed over 300 development projects with a total value of €18 bn across Europe since 2000, and currently has a further €8 bn currently underway across nine countries which includes Project Mark, a 55,000 m2 office project in Munich; Alphabet, a 40,000 m2 office project in Bois-Colombes, Paris; and Assembly, a 29,000 m2 part pre-let office project in Bristol, U.K.
‘While development activity slowed during 2020, a flight to safety will prolong capital targeting modern office and residential assets in prime and emerging locations with market leading technology and ESG credentials, increasingly focused on individual health and wellbeing,’ said Ian Chappell, head of development & value-added funds, AXA IM Alts. ‘With Covid-19 disrupting development pipelines, coupled with reduced competition and a retrenchment from the space by some of the more traditional players, we see an opportunity at all stages of the development cycle to create buildings that deliver environmental performance and long-term economic value, for both investors and users.’
