Fund has total €588m cash, with 75% committed in four developments
AXA Real Estate Investment Managers raised a further €211m of equity at the final close of its third European development fund.
After a €230m first close in 2010 followed by a second close early in 2011, the investment manager has raised a total €588m for Development Venture III, from 14 international institutional investors and sovereign wealth funds.
The fund has already committed more than 75% of the equity in four developments, said Laurent Vouin, head of opportunistic funds at AXA Real Estate. But with gearing and anticipated reinvestment of proceeds before the investment period’s expiry in 2014, the total capacity could be up to €2.5bn.
One of the investments is 215,000 sq ft Bath House at Holborn Viaduct in London, now named Sixty London, and the other three are in Paris, including the new Coface HQ.
Some 65% of the equity was committed by investors in Development Ventures I and II, returning after those funds made internal rates of return of more than 40% at a project level.
Two thirds of the capital came from European investors from the UK, Netherlands, Germany and Finland as well as some of the 10 or so French AXA insurance companies, and the remainder from North American and Middle East clients.
This is the first pan-European development fund – nos I and II were France only – and Vouin said it could look at Madrid and Milan “though not right now” as well as Germany. “We want to be agile in our management of this fund and have headroom for using the equity. There are a lot of opportunities but we are selective and not in a hurry.”
Vouin said AXA Real Estate could have started raising a third fund in 2006, after the second closed. “But we decided to wait until the cycle moved on: land prices were much too high.”