LONDON-AXA Real Estate Investment Managers has launched a fund focused on long-lease assets. The fund, dubbed UK Long Lease Property Fund, has already accrued $163 million and is targeting $1.3 billion as its cap.
“With bond yields remaining at record lows,” says Deborah Shire, AXA’s global head of business development, “liability matching has become the key challenge for many institutions and pension schemes in particular. Stable long-term and mostly inflation-indexed income generated by long-lease property offers an attractive alternative for investors.”
She adds that the broad-based nature of the target properties also provides diversification benefits and so minimizes risk.
Specifically, the fund will target a broad base of UK-based assets going well beyond the traditional core of the major commercial real estate food groups. The one common denominator is the investment targets will be their average 20-year lease terms and rosrter of high-qualilty tenants.
A company spokesman explains that the strategy is expected “to generate long-term, stable income streams, often with inflation indexation for institutional investors that are looking for investments with liability-matching attributes and is particularly well-suited for pension plans.”
In addition to office, industrial, hotel, multifamily and retail, the fund will also target healthcare, student housing, automotive and ground leases.