(Corrects to clarify that the JV will invest in loans worth up to 600 mln euros each, the total programme is not 600 mln euros)
* To invest in up to 600 mln euros of loans
* To invest primarily in France, Germany, Britain
* AXA to manage portfolio on behalf of venture
OSLO, Oct 15 (Reuters) - Norway’s $790 billion sovereign wealth fund and AXA Real Estate have formed a joint venture to invest in real estate loans worth up to 600 million euros ($815 million) each, primarily in France, Germany and Britain, the investors said on Tuesday.
AXA Real Estate, a unit of French insurer AXA, will manage the portfolio on behalf of the fund, commonly known as the oil fund, and the 50/50 venture plans to invest mostly in primary issuances of commercial real estate loans.
“The joint venture will allow Norges Bank Investment Management to achieve two main objectives: invest in commercial real estate debt, and invest alongside an experienced team with balance sheet capacity and a long term investment horizon,” said the fund, which invests Norway’s surplus oil tax revenues.
The partners are targeting investments of up to 600 million euros per loan and the size of the total programme will largely be market driven, a spokeswoman for the Norwegian fund said.
Europe faces a real estate debt funding gap - the difference between the debt in need of financing and the funds available - of $50 billion for 2013-14, property consultancy DTZ said in June.
“It is a market that was dominated by banks till now and the banks are now under pressure by the regulators to reduce their exposure,” Isabelle Scemama, AXA Real Estate’s Global Head of Real Assets Finance, told Reuters. “So a lot of the loans are coming to maturity, such as the ones that originated before the crisis.”
Scemama said investing in real estate debt was attractive as it allowed institutions to diversify their holdings, and also delivered returns that beat yields on the safest European government bonds.
Norway’s oil fund, one of the world’s largest investors, is allowed to invest up to 5 percent of its portfolio in property but has only invested 1 percent so far. A relative newcomer to the real estate market, it has primarily focused on top category office space in major cities like New York, Paris and London.
The fund already has a partnership with AXA after the two bought a 702.5 million euro property portfolio in Paris in 2011. It was one of the oil fund’s first property purchases after receiving a mandate in 2010 to invest in real estate. ($1 = 0.7361 euros) (Reporting by Balazs Koranyi and Brenda Goh; Editing by Mark Potter)