AXA Real Estate Investment Managers has raised ¥15 billion (€130 million) in a first close of its Japanese Commercial Real Estate Debt investment vehicle from a Japan-based AXA Group insurance company.
The property loan fund closing comes despite the chaos inflicted on the county by the recent earthquake and tsunami. In a statement, Axa said: “Despite the recent tragic events, AXA Real Estate remains a long term believer in the Japanese economy and the underlying fundamentals of its real estate market.”
The investment vehicle will be managed by an in-house team of Japan-based professionals, backed up by property lending specialists at the firm. It will be able to invest in loans of between three and ten year terms, longer than can typically be provided by local banks, and will focus on newly originated senior loans backed by prime commercial real estate assets located in the Greater Tokyo region either directly or as part of a syndicate behind a bank.
The firm added it was restricting lending to a maximum of 65 percent of the underlying asset value. The vehicle will also consider buying existing loans in the secondary debt market, although that will not be the main focus of the investment strategy.
Frank Khoo, AXA’s global head of real estate Asia, said: “The resilience of the Japanese people and the speed and efficiency with which they have been dealing with the situation, is an inspiration to us and we are pleased to make our support clear. We believe that the Japanese economy, as a whole, will recover in a relatively short space of time, at which point the underlying imbalance of supply over demand in real estate lending will be the same as before.”
Japan, like other international real estate markets, has also been subject to a reduction in available bank financing, prompting insurance companies and other institutions to step in to the void.
While at a comparatively small scale today, AXA has already been on the front foot in introducing a vehicle capable of lending senior finance in Europe. In April, the firm said fundraising for its European effort, AXA Commercial Real Estate Senior 1, had reached €530 million ahead of a final closing this summer. The fund has already committed to at least eight different loans, with a total value of €375 million, so far.
Khoo said: “The fact that many banks in the region still have limited capacity to lend on commercial real estate remains unchanged and this presents a clear opportunity for us to satisfy some of the significant demand in the region, whilst delivering value for our investors.”
Tetsuya Karasawa, AXA’s head of Japan business development, added: “With the initial equity now in place, we hope to secure further commitments shortly from investors who are keen to access the attractive risk adjusted returns. Living and working in Japan I am fully aware of the impact the recent earthquake has had on our country and I am pleased that we are able to make this positive announcement today which we hope will encourage other investors to focus on the long term prospects of the Japanese economy rather than the short term impact of recent events.”