AXA Real Estate raises further EUR 2b for debt fund

AXA Real Estate Investment Managers has raised a further EUR 2 bn on behalf of its pan-European debt strategy, bringing its total investment capacity to around EUR 4.7 bn.

The French investment manager has so far invested EUR 2.5 bn in property-backed debt.

The fresh capital has been raised from major institutional clients and AXA Group companies in Germany, France, UK, Benelux, Spain and Japan. AXA Real Estate's regulated entity, AXA REIM SGP, advises it on debt investment activity.

AXA Real Estate expects to further accelerate the pace of its commercial real estate debt investment over the next few months and, given the exceptional market conditions for senior lending, expects to invest over EUR 2 bn during 2012. In 2011, AXA Real Estate invested EUR 1.5 bn in CRE loans on the primary as well as secondary markets, of which 40% was undertaken in the last quarter of the year, as European banks withdrew from real estate finance.

These investments were undertaken principally in the UK, France and the Netherlands. In 2012, AXA Real Estate anticipates significantly growing its exposure to France and Germany, as the traditional local providers of debt in these countries continue to follow the UK banks in adjusting their real estate lending strategies downwards.

AXA Real Estate will continue to invest primarily in senior debt secured against prime properties, which it believes provide the most attractive risk-adjusted returns in the current uncertain economic environment. Spreads on CRE loans have moved up since the onset of the Eurozone crisis in summer 2011. The asset class has become more accretive compared to other traditional credit instruments, given the overall risk re-pricing observed on all asset classes in Europe and the increasing imbalance between supply and demand for CRE loans.

AXA Real Estate first entered this market in 2005.

'While we are able to invest in the full spectrum of debt products across multiple geographies, our focus will remain on senior loans which are supported by prime income producing assets as we believe these currently offer by far the most attractive risk adjusted returns,' said Isabelle Scemama, AXA REIM SGP's head of CRE Finance.