AXA buys another £200m of senior loans from Eurohypo

Deal brings asset manager’s investment in UK debt in 2011 to €1bn

Eurohypo has sold another £200m of UK senior loans at par to AXA Real Estate’s debt investing platform.

AXA Real Estate bought participations in loans secured on: Lakeside regional mall in Essex, the St David’s shopping centre in Cardiff and the Knights-bridge Estate in London, SW1, taking its investment in UK debt last year to about €1bn.

Isabelle Scemama, head of CRE Finance at AXA Real Estate, said the UK loans formed one of two portfolios – the other being in France – in which AXA invested during the last quarter of 2011. She said around €600m was invested in this period, or 40% of a total €1.5bn invested in senior debt over the whole year.

Two-thirds of this investment, or about €1bn, was in the UK and the remainder in France and the Netherlands, and she anticipated increas-ing exposure to France and Germany this year, when AXA expects to invest €2bn.

Eurohypo’s UK head of syndication, Margo Waddup, said the bank had syndicated about £650m of the debt that it had originated in the UK in the last two years. “This was one of the first examples of an insurance company buying a par portfolio of property loans but is a style of transaction we expect to become more common,” she said.

The blended loan-to-value was around 50%. Eurohypo is shrinking its balance sheet and this sale allowed the bank to make a direct reduction.

The bank’s first portfolio deal with AXA was in February 2011, when it syndicated £142.5m from three facilities: Drapers Gardens in the City, £50m in Lakeside and £50m of a £230m facility it made with Deutsche Bank to London fund WELPUT.

AXA Real Estate has raised €4.7bn of capital to invest in senior debt, from a syndicate of “close to 10” investors, initially from France, Belgium and the UK and more recently from Germany, Spain and Japan.

The latest capital raise means the syndicate has capacity to do bigger deals, up to €150m. Scemama said for the first time AXA was leading the origi-nation process, on a deal which closes next month.

“Borrowers are coming directly to us. We continue to work with banks but we are usually the larger lender now. This is a natural trend when you have capacity to do €150m.”