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January 11, 2017  

AXA Eyes $1 Billion of US Property Deals

AXA Investment Managers plans to step up its pace of U.S. acquisitions, aiming to buy $1 billion of properties this year.

The French firm expects U.S. real estate fundamentals to continue to improve, according to chief executive Pierre Vaquier. After selling two Manhattan office properties last year, it’s looking to more than double its remaining property holdings across the country.

To that end, AXA this month promoted Steve McCarthy to head of North America. As previously reported, it hired Aaron Kutner from Clarion Partners in November as U.S. director of acquisitions, reporting to McCarthy. The shop is recruiting two additional staffers.

“This is the world’s largest, most transparent, most liquid market,” McCarthy said. “The prospects for economic growth and performance are comparatively attractive.”

AXA’s real-assets platform began buying North American properties in 2012, via separate accounts. It targets core-plus and value-added investments in primary and secondary markets with job and wage growth. Typical purchases include office, industrial, apartment and urban and grocery-anchored retail properties. More selectively, it looks at what McCarthy calls “counter-cyclical plays,” including student housing and data centers.

One of its largest acquisitions in the past year was the 630-unit Stoneridge apartment complex in Ashburn, Va. A partnership between AXA and Cortland Partners of Atlanta paid $136 million, or $216,000/unit. The seller was Crow Holdings of Dallas.

AXA remains interested in Manhattan properties, despite having sold off its two biggest holdings last year. Via its 1991 takeover of Equitable Life, AXA had inherited the 1.8 million-square-foot building at 787 Seventh Avenue, along with a minority interest in the adjacent 921,000-sf building at 1285 Sixth Avenue that it later increased to a 50% stake. AXA sold the Seventh Avenue property for $1.9 billion to Calpers, which was advised by CommonWealth Partners of Los Angeles. Along with partner J.P. Morgan, it sold the Sixth Avenue building to a partnership led by RXR Realty of New York for $1.6 billion.

The dispositions brought the firm’s U.S. property holdings down to about $750 million, and McCarthy said it intends to aggressively build that back up.

“As a global player, we are committed to building long-term exposure to the U.S. market,” he said.

AXA wants to hire two executives to flesh out its team. It’s seeking a director of asset management with 13-15 years of experience, who would report to McCarthy, and a vice president of acquisitions with at least seven years in the business to report to Kutner.

In addition to buying properties, AXA’s real-assets platform invests in commercial mortgages. Its U.S. loan portfolio stands at about $1 billion, and it aims to add another $1 billion this year.