AXA Real Estate: growth across EU due to bank deleveraging, market mispricing

LONDON | AXA Real Estate confirmed Monday that transaction volumes across the full risk spectrum of opportunistic to core have substantially increased in Europe. The real estate portfolio and asset fund was during 2011 a net buyer on behalf of its clients, with acquisitions totalling €2.6 billion, which included €900 million of committed development expenditure, compared to sales amounting to €2.1 billion.

The financial management firm was active throughout Europe, in the economically stronger euro country members but in the Mediterranean periphery as well. France accounted for 42% of total acquisition values, the UK 26%, Switzerland 17%, Germany 10%, and the remaining 5% comprised deals in Italy, Benelux and Spain.

“By increasing our transaction volumes, we have acted at an optimal time in the economic cycle to capitalise on further bank deleveraging and to take advantage of where we see fundamental mispricing by the markets as they struggle to come to terms with the new world of low growth,” said Anne Kavanagh, Global Head of AXA Real Estate.

In terms of disposals, France represented 67% of all activities, largely due to the sale of a 50% holding in seven Paris-based assets to Norges Bank Investment Management in a deal with a total value of €1.4 billion, the largest office investment deal in Europe of 2011. Additionally in France, the First Tower in the La Défense area of Paris was sold for €380 million, after a heavy refurbishment programme led by AXA Real Estate. Other sales were completed in the UK (15%), Germany (10%) and Switzerland (5%). The remaining 3% comprised deals in Italy, Benelux, Spain and Portugal.

As well as an increase in the number of transactions, 2011 also saw an increase in average transaction size for AXA Real Estate, from €12 million in 2010 to €25 million in 2011.

Kavanagh indicated that the company already has almost €2 billion of acquisitions already in the pipeline for 2012, so “we look forward to another busy year ahead as we will continue to use our pan-European platform to explore opportunities.”

The fund has particularly been active in the commercial real estate market, investing around €1.5 billion,

“when the banks adjusted down their activity as the euro zone crisis escalated,” Isabelle Scemama, AXA Real Estate Head of CRE Finance pointed out. “We have greater ambitions for 2012.”

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