AXA Real Estate Investment Managers has reached a final close of €2.9 billion on its latest pan-European debt fund, Commercial Real Estate Senior 9 (CRE9), breaking through its €2.5 billion target.
The firm also announced that it was awarded a £350 million ($546 million; €498 million) separate debt mandate by a UK pension fund, bringing its real estate debt platform to a total of €11.3 billion.
The new fund is the first to include a German feeder fund which will issue rated notes to German-regulated institutional investors. The structure was built in response to discussions with investors and incorporates a €350 million commitment that is part of the final close total.
Isabelle Scemama, head of fund groups and debt investing at Axa Real Estate, said earlier this year: “Germany is probably one of the toughest countries in terms of regulation. This fund comes at the right time because the debt marker there is competitive and returns are very low. That means it’s critical for investors to diversify their allocations outside Germany and our feeder is a compliant route for them.”
She added that last year AXA generated average returns of 280bps over Euribor on investment grade loans of between five and seven years, as reported.
The vehicle is also AXA Real Estate’s first debt fund to allow capital to be recycled back into the fund following the maturity of an asset. The structure is designed to allow investors to maintain their allocation to the platform, the firm said in a statement.
AXA declined to answer questions about how this recycling mechanism would work and if it means commitments can be recycled continually, in effect making the fund an evergreen vehicle.
Timothé Rauly, AXA’s head of CRE finance, said: “Having superseded all initial fund targets, our latest close at €2.9 billion is testament to our strong performance and proven track record within the debt market. Through accommodating varying and dynamic investor requirements, we have successfully secured third party regulated German capital for the first time, as well as structuring the fund to allow investors who want to keep their fund invested with us to recycle capital.”
The vehicle garnered commitments from 18 institutional investors from the UK, the Netherlands, France, Germany, Ireland, Sweden, Denmark, Belgium and Switzerland, and the fund widened the investor base beyond insurance companies and pension funds with some new investors, the firm said.
AXA Real Estate has raised €3.4 billion since September 2014. The platform’s investments are 95 percent focused on four main territories: the UK (43 percent); France (26 percent); Spain (17 percent); and Germany (9 percent).
Source: PERE