AXA Real Estate Investment Managers has raised a further €2bn (£1.7bn) on behalf of its pan-European debt strategy which it expects to invest this year.
This brings its total capacity in this area to around €4.7bn, of which €2.5bn has already been invested.
The capital has been raised from major institutional clients and AXA Group companies in Germany, France, the UK, Benelux, Spain and Japan.
AXA’s regulated entity, AXA REIM SGP, advises it on debt investment.
AXA 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 more than €2bn during 2012.
In 2011, AXA Real Estate invested €1.5bn in real estate 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.
The firm said that this year it expects to expand significantly 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.
It 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 commercial real estate 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.
Isabelle Scemama, AXA REIM SGP’s head of commercial real estate finance, said: “We are aiming to invest over €2bn of investments in 2012, but will continue to pay close attention to the overall market conditions.
“We increased our investment activity considerably in the final quarter of 2011, particularly in France and Germany, and we would expect to invest further in these regions in 2012 as the banks there could follow their UK peers in adjusting down their lending strategies.”
“While we are able to invest in the full spectrum of debt products across multiple geographies, our focus will remain on senior loans that are supported by prime income-producing assets as we believe these currently offer by far the most attractive risk-adjusted returns.”
bridget.oconnell@estatesgazette.com
