AXA Real Estate Investment Managers is launching a €1 bn pan-European value-add fund, Ian Chappell, head of fund management at AXA in London, Sara Seddon-Kilbinger reports.

AXA Real Estate Investment Managers is launching a €1 bn pan-European value-add fund, Ian Chappell, head of fund management at AXA in London, Sara Seddon-Kilbinger reports.

'We're currently in the process of fund raising for a €1 bn pan-European value-add fund,' Chappell told PropertyEU. 'We expect to raise €500 mln in the first half of this year and will gear it by around 50%. We expect to have the first closing later this quarter.'

The fund will be flexible in terms of property sectors; it will include offices, retail and logistics and could also invest in the hospitality sector and alternative assets, such as healthcare and student housing, according to Chappell. AXA expects the fund to generate an annual return ‘in the mid-teens, Chappell said.

The fund manager focuses primarily on core markets such as the UK, Germany, France and the Nordic region, where it has seen ‘high pricing dislocation for good quality assets’, according to Chappell. However, AXA has also shown itself willing to delve into markets like Spain and Italy for the right opportunities. Nonetheless, there are some markets it will avoid : ‘We’ll probably avoid value-add strategies in second and third tier markets such as south-eastern Europe and the CEE region, with the exception of Poland,'Chappell said.

AXA doesn’t have a set investment target for value-add investments this year, although Chappell expects it to be ‘at least as much’ as the €1.4 bn invested in the past 18 months. ‘It’s hard to have a specific target as value-add is very tactical but we see a lot of good opportunities in 2014,’ he said.

AXA Real Estate Investment Managers announced earlier this week that it had completed €1.4 bn of value-add investments in Europe over the past 18 months. In total, it was involved in 11 value-add deals across six European countries, including France, Italy, Spain and Holland. Its largest acquisition in the period was a €172 mln office portfolio in Barcelona from Generalitat de Catalunya last June, marking AXA’s first office acquisition in Spain since 2008. It also bought the NH Grand Hotel Krasnapolsky in the centre of Amsterdam for €157 mln, also in June.

Last year, it also launched some sizeable funds, including its UK Long Lease Property Fund, which it launched in January. The fund raised £125 mln in its first closing and AXA is hoping to grow the fund to £1 bn by the end of 2017. It also launched its €420 mln Caesar fund, backed by Italian institutional investors, which invests in both the eurozone and the UK, in February last year.

The fund manager is also hoping to grow its mandate business this year, according to Chappell. Earlier this month, AXA announced that it had been appointed by US pension scheme, The Teacher Retirement System of Texas (TRS), to manage a new €135 mln investment mandate targeting value-add investments in Europe. The mandate will focus largely on core value-add investments in Northern Europe. TRS is the largest public retirement system in Texas and currently manages $120 bn of funds to finance member benefits. It is the sixth largest public pension plan in the US and among the 20 largest funds in the world.

AXA Real Estate Investment Managers, a wholly-owned subsidiary of AXA Investment Managers, had more than €47 bn of AUM as of end-December 2013.