AXA raises €350m for debt fund

The French insurer has held a first close for Commercial Real Estate Senior 1, which provides loans either directly to borrowers or indirectly by backing a syndicate of banks

AXA Real Estate has raised €350 million for a pan European commercial real estate debt fund.

The Paris-based insurer, which has €39 billion of real estate assets under management, said it has held a first close for Commercial Real Estate Senior 1. Investors in the vehicle are a mix of other European insurance companies as well as companies within the AXA Group.

AXA has been investing in European debt since 2005, but rekindled its activities only recently after the credit crunch forced a slow down.

It said the “bulk” of investments to date were made from the middle of 2009 onwards although most were made during 2010.

The fund provides senior loans either directly or by acting as a syndicate behind a bank and focuses on investments which are backed by “good quality income-producing” properties in euro denominated assets, though it is also looking to invest in the UK and the Nordic countries.

Isabelle Scemama, AXA Real Estate’s head of debt and advisor to the fund, said most banks had a very limited capacity to lend. “We see a clear opportunity to grow this market and believe that it eventually will follow the US example where around 20 percent of real estate transactions are underwritten by long- term investors such as insurance companies, leading to a far more liquid and transparent market in Europe.”

The company is following a strategy put into place by chief executive Pierre Vaquier, who in an interview with PERE in November 2008, said he wanted to expand on the €1 billion of debt investment it had made. 

Scemama told PERE in December last year: “I am convinced we will see insurance companies representing a significant part of the market, like they already do in the US.” But she agreed it was clear that insurance companies (combined with other alternative lending sources) would not be the whole answer, just part of a solution, to plugging some of the real estate financing gap in Europe.