AXA raises EUR 130m for Japanese debt fund

AXA Real Estate Investment Managers has raised YEN 15 bn (EUR 130 mln) at the first close of its Japanese Commercial Real Estate Debt investment fund.

The property arm of the insurance giant said that it remains a long-term believer in the Japanese economy and the underlying fundamentals of its real estate market despite the recent earthquake and tsunami.

The equity was raised from AXA Group's Japanese insurance company. AXA said additional capital funding is expected from AXA insurance companies and third-party institutions.

The vehicle will be able to invest, through investments in trust beneficiary interests, in loans of between three and 10-year terms, longer than can typically be provided by local banks, on a competitive floating or fixed rate basis with spreads between 200 and 250 basis points above the Tokyo Interbank Offered Rate (TIBOR).

It will focus on newly originated senior loans which are backed by prime commercial real estate assets located in the Greater Tokyo region either directly or as part of a syndicate behind a bank. Lending is restricted to a maximum of 65% of the underlying asset value. The vehicle will also consider buying existing loans in the secondary debt market, although that will not be the main focus of the investment strategy.

This first closing brings AXA Real Estate's total global investment capacity into debt to over EUR 2.7 bn and follows the recent second closing of the Commercial Real Estate 1 fund, which has raised EUR 530 mln to date to invest in European real estate debt opportunities.