AXA IM Alts’ flagship core European real estate fund raises first green bond with EUR500m issuance

AXA IM Alts' flagship European open-ended real estate fund AXA CoRE Europe has priced a seven year EUR500 million green bond offering with an ambitious Green Finance Framework. 

The Fund is managed by AXA IM Alts’ market leading Real Assets team on behalf of a wide range of investors across Europe, North America and Asia including 60-plus third party clients.
 
The Green Bond, which represents the first issuance undertaken by AXA CoRE Europe, attracted strong demand with a c4x oversubscribed orderbook amounting to EUR1.8 billion. The Green Notes were placed across a broad range of c80 European and international institutional investors.
 
The Green Notes pay a coupon of 0.75 per cent and the issue price of the Green Notes is 99.364 per cent.
 
The Green Bond was issued under AXA Core Europe’s Green Finance Framework which has been approved by Sustainalytics, a market leading independent ESG and corporate governance research, ratings and analytics firm, which confirmed its alignment with the ICMA Green Bond Principles. 
 
The proceeds of the Green Bond will be used to replace a number of existing debt facilities while reducing the Fund’s average cost of debt and improving average maturity.
 
The Green Notes have been assigned a BBB+ investment grade rating by S&P Global ratings. Goldman Sachs International acted as Sole Global Co-ordinator and Bookrunner on the transaction.
 
AXA CoRE Europe seeks to provide institutional investors with long-term stable income through the acquisition of high-quality core real estate assets with resilient income profiles across major cities in Europe, adopting a research led approach to capitalise on individual market dynamics and timing. 

The Green Bond is in line with AXA IM Alts wider ambition of seeking to affect positive changes in society through its investments.
 
Isabelle Scemama, Global Head of AXA IM Alts, says: “The success of the Fund’s inaugural Green Bond is an important achievement for the AXA IM Alts platform and a further indication of our overriding ambition to provide market leading returns to our clients while at the same time pursuing strategies and investments that allow us to make a positive contribution to society and improve tomorrow.”
 
Timothé Rauly, Global Head of Fund Management at AXA IM Alts, says: “The issuance of AXA CoRE Europe’s first green bond is a key milestone for the Fund. In addition to the immediate benefits of reducing the cost of debt and extending the average debt maturity, it will diversify the source of financing. The capital structure of the Fund remains unchanged. This access to the debt capital market will facilitate the growth of the Fund and reinforces its access to larger core investments where there is less competition. Furthermore, we believe the success of the transaction, being four times oversubscribed, is a clear endorsement of the quality of assets in the Fund’s portfolio, as well as its investment and ESG strategies.”