AXA long lease fund makes debut buys

AXA REIM strikes first deals for new fund based on making core investments in properties across both vanilla and alternative asset classes, investing £38 million in two supermarkets.

AXA Real Estate Investment Managers (AXA REIM), the real estate investment management arm of French insurer AXA, has made the first acquisition for its UK Long Lease Property Fund.

The open-ended fund, which was launched at the start of this month with initial equity of £125 million (€153 million; $201 million), has purchased two supermarkets for about £38 million.

One of the supermarkets is in Sevenoaks, to the south east of London, and is let to Waitrose. The other is in Derby, in the Midlands, and is let to Tesco.

AXA REIM said the investments are in line with its strategy of acquiring a core portfolio of assets in the UK that is subject to long leases. The fund has been marketed as a product able to match the liabilities of pension funds through property investments with long and secure income streams.

AXA REIM hopes to corral a £1 billion for the fund over the next five years.

The fund will be used for investments in a range of asset classes, from outlays for properties such as these supermarkets, to more alternative real estate investments in sectors including healthcare, leisure and automotive properties.

Typical leases of the properties bought for this fund would be 20 years or more and be subject to fixed rental uplifts or inflation indexes.

John Osborn, fund manager of the fund, said: “Both of the assets we have acquired fit precisely into the fund’s strategy of investing in properties with strong property fundamentals that are capable of generating secure, long term income streams with rental uplifts. We have a strong pipeline of suitable investment opportunities across a broad range of sectors which we are currently assessing, while, in parallel, we continue to expand the fund’s investor base.”