AXA Real Estate targets €2.5b in new fundraising spree

French portfolio and asset manager AXA Real Estate is targeting at least another €2.5 bn of equity commitments in a new round of fundraising for its European debt platform, Isabelle Scemama, global head of real asset finance at AXA Real Estate, told PropertyEU.

‘We will soon launch a new debt fund while working to boost the separate accounts business. We now have 40 clients (including six AXA entities) in total, and we continue to see more and more clients who want to integrate real estate loans in their strategies,’ Scemama said in an interview during the MIPIM trade fair in Cannes.

In total, AXA Real Estate has secured commitments worth a total of €7.9 bn, of which more than €5 bn has already been invested. ‘We expect to have deployed everything by year-end, but at the same time we will also experience some loan repayments given that it’s been five years now since the underwriting of the first loans,’ she noted.

Commenting on changes in the fundraising market, Scemama noted that the company has been able to secure several separate mandates of over €300 mln, underlining institutional investors’ strong commitment to real estate debt. ‘At first we faced investors who were just interested in sounding out the debt segment. Nowadays we have more and more clients come to us with deep pockets who want to add real estate loans to their business.’

While insurance companies initially represented the bulk of the group’s client basis, today they share the stage with global pension funds from the US, Europe and Japan, which account for a 50% share. ‘It's a fixed-income play, with investors switching from government and corporate bonds to assets offering a higher yield,’ she added.

According to Scemama, the loan platform, which counts Norges Bank Investment Management (NBIM) among its investors, will focus largely on the UK, Germany and France. ‘We like the UK market because it is highly liquid and transparent and we have also done a fair share of lending in France. Germany, on the other hand, is a very aggressive, competitive market which poses more challenges. We have also recently re-entered the Spanish market with the signing of three deals so far.’

AXA Real Estate has a remit to invest in any asset class via the platform, although it has a strong focus on offices and retail which each represent a 40% share of lending so far. Scemama: ‘We underwrite loans on a case-by-case basis - we've probably reviewed 90% of the lending opportunities in the market.’ Whereas in the past the company carried out most trading in secondary markets, today AXA Real Estate is more active in the primary market, she added.

‘Size is critical for us now and is also our key competitive advantage. We are by far the largest underwriter in the market and this makes us "unavoidable" in a way. We source loans, a lot of them with the banks, and we can underwrite tickets of up to €300-€600 mln, depending on the loan criteria,’ she added.