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Italian institutional investors pile into European office fund

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EUROPE – AXA Real Estate Investment Managers has secured the backing of 13 Italian institutional investors for its new pan-European fund and has beaten its capital raising target.

The fund manager announced a first closing for the Caesar Fund in early 2012, but has since nearly doubled the capital raised from €118m to €209m, with 20% of the total coming from AXA insurance companies.

The fund launch is noteworthy at a time when the capital-raising market for blind-pool funds in Europe is moribund.

It also reflects a growing trend among Italian institutional investors to move outside the domestic real estate market.

When factoring in leverage, the closed-end fund will be able to invest up to €420m in core office buildings in euro-zone countries and the UK over the next 24 months.

It will then have the option, under Italian regulations, to open the fund to further commitments.

AXA Real Estate will seek to generate an annual average dividend distribution of 5.5% once the investment phase is completed, and an internal rate of return of 9%, net of fees.

The Caesar Fund is the second locally regulated vehicle managed by AXA Real Estate's business in Italy, the first being the Core Italian Properties Fund (CIPF), which was restricted to the Italian property market and is now fully invested.

Giorgio Pieralli, managing director of AXA REIM SGR and fund manager of the Caesar Fund, said: "To have exceeded our target and secured €209m of predominantly third-party capital during an extremely tough capital-raising environment is a real testament to AXA Real Estate's ability to both tailor products that suit its clients' requirements and ultimately secure capital into them."

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