Norwegian SWF partners with AXA for CRE debt

AXA Real Estate Investment Managers and Norges Bank Investment Management ‘s new joint venture will be able to underwrite senior loans of up to €600 million.

Two of Europe’s biggest investors have formed a joint venture that will invest in the debt of European commercial real estate.

AXA Real Estate Investment Managers, the real estate-focused asset management arm of French insurer AXA, and Norges Bank Investment Management, manager of one of the world’s biggest sovereign wealth funds, will co-invest together, they said in a statement.

AXA REIM claims to be the largest pan-European real estate debt manager with €7.5 billion in assets under management. Norges Bank IM manages the Norwegian Gorvernment Pension Fund Global, a NEK4.14 trillion (€510 billion; $688 billion) sovereign wealth fund.

The new venture will target investments in large senior real estate loans of up to €600 million, with a primary focus on the UK, France and Germany. The two firms are understood to want to invest on a 50:50 basis.

So far this year, AXA REIM has invested €1.8 billion against a target of €2.5 billion. The firm said 45 percent of capital deployed in 2013 has been in the UK.

Isabelle Scemama, global head of real assets finance at AXA Real Estate, commented in the statement: “Partnering with Norges Bank helps underline our leadership in the European commercial real estate lending market and further strengthens our relationship with this world class investor. This partnership consolidates our competitive advantage in that it increases the size of individual real estate loans we can underwrite to €600 million. We are now looking forward to co-investing alongside them as we seek further opportunities to invest in the European CRE debt markets.”

Commercial real estate debt is proving an increasingly popular asset class for large institutional investors such as pension funds and insurers, as its risk/return profile makes it attractive to such groups from a liability-matching perspective.

Oliver Smiddy writes for PERE's sister publication Private Debt Investor.