TOKYO-AXA Real Estate has raised $184 million to invest in commercial property loans here.
Company executives say they believe in the underlying fundamentals of Japan’s commercial real estate market, despite an economic fall-back due to the aftermath of the Great Tohoku Earthquake.
The Paris-based firm will use its local property experts to manage the investment vehicle, which will look at loans of between three- and 10-year terms. The vehicle will focus on newly originated senior loans which are backed by prime commercial real estate assets in the Greater Tokyo region, either directly or as part of a syndicate behind a bank. Secondary debt loans will also be considered, but will not be the main focus. Lending is restricted to a maximum of 65% of the underlying asset value.
Real estate firm RREEF recently released a study that shows Japan’s economy will likely dip by about 6.5% this year, mostly because of power issues from the failed nuclear reactors. Frank Khoo, the company’s global head of Asia, said despite the tragic events, AXA remains a long-term supporter of the Japanese market.
“We believe that the Japanese economy, as a whole, will recover in a relatively short space of time, at which point the underlying imbalance of supply over demand in real estate lending will be the same as before,” Khoo said in a statement. “The fact that many banks in the region still have limited capacity to lend on commercial real estate remains unchanged and this presents a clear opportunity for us to satisfy some of the significant demand in the region, whilst delivering value for our investors.”
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