Axa Raises $260 Million for Japan Property Debt Fund

Axa Real Estate Investment Managers raised 26 billion yen ($260 million) for a commercial-property loans fund in Japan, where Prime Minister Shinzo Abe is trying to boost the economy with monetary and fiscal stimulus.

The fundraising will increase Axa Real Estate’s debt program in Japan to more than 40 billion yen, the unit of Paris-based Axa SA said in a statement today. The company raised the money from two affiliates in Japan and plans to invest the new fund in loans backed mainly by projects in the Tokyo area.

Abe’s administration has sought to re-energize Japan after years of deflation and population declines reduced manufacturers’ incentive to expand at home. The amount of real estate debt maturing in Japan through 2014 exceeds available funding by about $20 billion, the biggest gap in Asia, broker DTZ said in a June report.

“Since we secured the Olympic Games in 2020, most industrial people are saying that in another five- to seven-years time we can still have a good, picking-up economy,” Tetsuya Karasawa, Axa Real Estate’s deputy head of Japan, said in an interview. “We want to have some diversification. We can target office buildings, residential facilities, retail, logistics and so-called business hotels.”

The fund will offer loans of about 3 billion yen to borrowers at margins of about 150 to 180 basis points above local benchmarks, he said. Foreign investors and small real estate investment trusts will probably be their main customers, Karasawa said. A basis point is 0.01 percentage point.

Axa started its first Japanese commercial real estate debt fund in 2011 and has achieved its target returns, Karasawa said, without being more specific.

(Removes erroneous reference to returns in last paragraph of story that ran on Nov. 18.)
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