AXA IM liquidates $192m Japan office fund

The real estate subsidiary of French insurance company AXA has sold down its Tokyo office fund, generating higher than expected returns.

AXA Investment Managers – Real Assets, the real assets investment management business of French insurer AXA, has liquidated its Japan real estate fund focused on core and core-plus office investments in the country's capital city Tokyo.

The firm has said in a statement that the Tokyo Office Property Fund (TOP) has delivered an internal rate of return of 25 percent, far exceeding the firm’s original return expectations of around 10 percent.

The TOP fund was launched in August 2012 as a closed-ended vehicle that would be invested in mid-sized office properties in Tokyo. The fund’s 20 billion yen ($192 million; €170 million) portfolio was invested across five assets.

AXA did not specifically mention the launch of a successor fund, but said that it would “look to replicate the success of the TOP through investment in new territories, mandates, asset classes as well as on the ground teams, including developing the local partners network and research capabilities.”

Investments made via the TOP include the acquisition of Kojimachi, an office property located in the Chiyoda district, and Harajuku, which is located in the Shibuya district. Both assets were purchased for a total of $36 million essentially as co-investments between the TOP and the Tokyo Real Estate Investment Fund, a fund managed by Sumitomo Mitsui Trust Real Estate Investment Management. The subsidiary of the Japanese banking conglomerate was the asset manager for the TOP.

The divestment of the fund comes less than a month after AXA IM-Real Assets made one of its largest property deals in the region with the purchase of Eureka Funds Management, a Sydney-based independent real estate fund and investment manager for an undisclosed sum. The acquisition has significantly bolstered the firm’s assets under management in Asia. Prior to the purchase of Eureka, which has assets under management of more than A$5 billion ($3.8 billion; €3.4 billion), AXA IM – Real Asset’s Asia AUM was previously around €550 million.

“We consider the Asian market as an attractive investment opportunity for AXA IM – Real Assets and our global clients, with the importance of the region heightened as volatility and unpredictability affects other key geographies. As institutional investors continue to search for better yields, we now have a fully integrated and truly pan-Asian proposition, with local knowledgeable teams at its heart, for those institutions looking to take advantage of the favourable environment and invest in the region,” said Frank Khoo, global head of Asia at the firm.