AXA Investment Managers - Real Assets (AXA IM - Real Assets) completed EUR15.2 billion of transactions on behalf of clients in 2018 and raised EUR7.2 billion of new capital over the course of the year.
2018 saw the completion of EUR15.2 billion of global equity and debt transactions, with direct property and infrastructure volumes reaching EUR9.2 billion, comprising EUR5.2 billion of acquisitions and EUR4 billion of disposals, while debt-related investments stood at EUR6 billion.
In line with its stated objective to focus on alternative asset classes, acquisitions in this space accounted for 40 per cent of overall 2018 investment activity. The emphasis was on sectors supported by clear demographically-driven growth prospects as AXA IM - Real Assets built on its successful track record of investing in logistics, hotel and healthcare real estate to grow the overall alternatives portfolio to EUR7 billion. Its teams of transaction and sector specialists also sourced innovative investment opportunities in exciting growth sectors, such as digital infrastructure, which AXA IM - Real Assets increased its exposure to with the acquisition, on behalf of clients, of DATA4, a leading European data centre portfolio and operating platform.
The residential sector accounted for EUR750 million of acquisition activity in 2018, expanding the global residential portfolio to over EUR10 billion. Highlight deals in this space included a series of acquisitions in the Irish Private Rented Sector (PRS), totalling 2,700 units and providing AXA IM - Real Assets with an immediately meaningful scale in this attractive market which it entered through a 50/50 joint venture with Kennedy Wilson in May 2018. Further residential acquisitions in were made globally, including in Japan, the Netherlands, Switzerland, and the Nordic region.
John O’Driscoll, European Head of Transactions at AXA IM - Real Assets, says: “In what was a competitive market environment we maintained strict investment discipline and did not compromise on the quality of assets that we invested client funds into during 2018. We remained resolute in our focus on alternative investment strategies whilst effectively expanding our international reach. 2019 is about continuing to expand globally and sourcing attractive opportunities to invest in alternatives, value-add and development projects in particular, whilst carefully navigating the shifting market environment. We will also aim to grow the value of investments and ventures undertaken over the past year, such as our data centre, residential and logistics platforms.”
Delivering on its aim to offer clients a diversified real assets portfolio, AXA IM - Real Assets’ infrastructure platform has grown to over EUR7 billion of AUM across debt and equity in the five years since its launch. In 2018 it completed, on behalf of clients, its first direct infrastructure investment in the UK, with the acquisition of a 15 per cent stake in Agility Trains West, grew its digital infrastructure exposure through the acquisition of the DATA4’s European data centre portfolio and operating platform, and announced the investment, as part of a consortium, in Altice France’s ‘Fibre to the Home’ business .
AXA IM - Real Assets continues to prioritise sustainability measures that reduce environmental impacts, improve tenant wellbeing, and set high standards for corporate governance. Its aim is to improve the sustainability performance of its existing buildings and to acquire and develop assets that meet the increasing investor and tenant demand for sustainability credentials.
In line with its build-to-core strategy, AXA IM – Real Assets continued to invest in ground-up development projects throughout 2018 with new schemes undertaken globally as its flagship 22 Bishopsgate project – set to be the City of London’s tallest building – remains underway, delivering strong leasing progress. Highlight additions include the investment in a circa 3,500 sq m Tokyo office development, anticipated to complete in 2021, where it has already secured a pre-let. It also completed the acquisition of TechnoCampus, a landmark office complex in Berlin, where planning permission has been secured to realise identified development potential through the delivery of an additional 20,000 sq m of new Grade A office space.
AXA IM - Real Assets remains one of the sector’s most active developers in Europe, with an established track record of managing and executing over 250 development projects worth more than EUR14 billion over the past 20 years, while it also has an additional almost EUR8 billion of projects currently underway, including: a redeveloped luxury hotel in boulevard des Capucines in Paris which will be operated under Kimpton, InterContinental Hotel Group’s luxury boutique brand; Stories, an ambitious c. 62,000 sqm office complex on the outskirts of Paris; FREEDOM, a 16,600 sqm office property being redeveloped in the Porte Maillot district of Paris, that has already been pre-let in its entirety, and; Aquarel, a 34,000 sqm office building in Issy-les-Moulineaux, southwest of Paris, that has been fully pre-let.
In 2018, a total of EUR7.2 billion in new capital was raised from international investors including 26 new third party clients. Capitalising on AXA IM - Real Assets’ long-established track record in Europe, a significant proportion of funds derived from new and existing sources in this market , whilst there was also breakthrough success in increasing capital from Asian institutions in Japan and South Korea, and continued strong penetration amongst North American investors. New capital raised was committed to a diverse range of products including infrastructure debt and PEVAV II, the second Pan-European Value-Added Venture, which closed in record time and above target with EUR643 million. The flagship Core European Fund continued to grow with a total of EUR1.7 billion in commitments at year-end. New third party capital was evenly directed towards debt and equity strategies, targeting both real estate and infrastructure investments.
Florence Dard, Global Head of Business Development at AXA IM - Real Assets commented: “Our continued success in raising capital, from both new and existing clients, underlines the attractiveness of the broad range of investment opportunities being offered by AXA IM - Real Assets. We have generated strong investor support for our core, value-add and alternative real estate strategies, while infrastructure is moving onto a wider pool of investors’ radars. Looking ahead to 2019, we have equally ambitious targets but will remain cognisant of where the market cycles are in our various territories and the importance of investing cautiously.”
Transactions outside of AXA IM - Real Assets’ home market of Europe accounted for EUR1.1 billion, comprising c. EUR290 million in the US and circa EUR850 million in Asia-Pacific. In a move that firmly positioned the business as a global leader in commercial real estate debt, it has agreed the acquisition of a real estate debt team from US-based Quadrant Real Estate Advisors, assuming the management of USD9.4 billion (c. EUR8 billion) in US commercial mortgage loans, bringing its total debt platform to circa EUR24 billion, once completed. The Asia-Pacific region also remains critical to AXA IM - Real Assets’ international growth agenda and it continued to strengthen its presence in this market, with EUR4.5 billion of assets under management (equity and debt) by its local team of investment professionals working out of offices in Tokyo and Sydney.
Isabelle Scemama (pictured), CEO of AXA IM – Real Assets, says: “2018 has been another hugely rewarding, yet intensive, year. Demonstrating the strength of our origination platform, we gained significant exposure to some of market’s best performing structurally supported asset classes, such as data centres and the PRS market, whilst continuing to create value through ambitious development projects. We continue to effectively satisfy our clients’ appetite for portfolio diversification through our 360 degree investment approach in multi-assets together with our market-leading capabilities in both equity and debt. We look forward to generating a return on strategic transactions, such as the expanded US debt offering, with the key overriding objective being to best serve our client needs.”
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