AXA Investment Managers – Real Assets is part of AXA IM Alts, one of the global leaders in alternative investments with €154bn of assets under management1, across real estate, infrastructure, private debt, alternative credit, private equity and hedge funds. AXA IM – Real Assets has €103bn in assets under management, including €73bn in direct property and infrastructure and €27bn in real asset finance1. It offers a 360° approach to investing in real assets, which comprises opportunities in equity or debt, across different geographies and sectors, as well as via private or listed instruments. Its teams have been managing funds and mandates for over 30 years and comprise over 600 people in 14 offices that operate in over 20 countries around the world, providing us with in-depth knowledge of countries, cities and sectors.

1 Source: AXA IM – Real Assets data (unaudited) as at Q2 2020.

Sector forecasts

Industrial: The COVID -19 pandemic has resulted in a step-change in e-commerce. Many online/omni-channel retailers are benefiting from a rise in e-tail sales and a strong gain in market share as more consumers buy online. Buying habits are expected to endure beyond the crisis, driving demand for logistics space from both 3PLs and retailers. Furthermore, the pandemic has shown up vulnerabilities in some companies’ supply chains, leading to increased demand for logistics space from some manufacturers as inventory levels are increased and less reliance is placed on just-in-time strategies. Increased pressure to re-shore or near-shore could also benefit logistics demand. With the pandemic highlighting the key role played by logistics, the sector is expected to remain of considerable interest to investors, resulting in further, modest yield compression.

Office: Offices are constantly evolving to adapt to changes in occupier behaviour and to keep pace with changing expectations. The design of work- places has evolved considerably over the past decade, moving from a model with designated workstations to a more agile hotdesking environment. COVID-19 has not changed the underlying trends shaping the office sector trend but led to a faster than expected implementation of remote working and a potential shift to lower desk ratios. The reversal of densification strategies to allow for social distancing and more meeting space to facilitate collaborative work when in the office are expected to counterbalance this trend. Low vacancy rates along with modest supply pipelines should mitigate extent of rental declines compared to previous downturns. 

Residential: The trends of urbanisation, chronic undersupply, housing affordability and barriers to mortgage finance make home ownership a real challenge. Protracted renting, rather than buying, is the reality for many young people and is driving demand for rental housing. This shift away from ownership to renting, which is a trend that also stretches beyond younger cohorts to those who choose not to own, is also stimulating demand for more flexible living options. Providing for a range of rental living options, through both new development and refurbishment of standing stock, including students, young professionals, families and seniors.

Retail: Although the retail sector was already struggling, the COVID-19 crisis has acted as an accelerator of the existing disruptive retail trends. Shopping centre closures and city lockdowns have exacerbated the profitability pressures that retailers were already grappling with due to omni-channel investment. Retailers are reporting dramatic losses, planning store closures and launching fierce negotiations with landlords to reduce the cost pressure of their retail premises, especially in the UK where occupancy costs have become unsustainable. On the back of rising vacancy, a probable rebase of ERVs and changing lease structure, we expect shopping centres to suffer the most, with significant repricing ahead, while food-anchored, local formats and retail parks should prove more defensive, from an income and valuation perspective.

Investment principles & strategy

AXA IM – Real Assets’ core business is real asset portfolio development and asset management. It aims to provide expert global real estate and infrastructure investment solutions throughout market cycles, supporting every client’s unique strategy. AXA IM – Real Assets launches and actively manages or advises real asset portfolios, seeking wide-ranging opportunities through a variety of investment strategies along the risk spectrum: from core to opportunistic, country-specific to geographically diversified, sector-specific to multi-sector. Its 360°, multidisciplinary real asset approach allows it to combine different management styles and expertise, to provide clients with individual investment solutions and deliver targeted returns commensurate with specific investor risk profiles and objectives.

Strategic corporate development

AXA IM – Real Assets’ strategic objective is to become a global player, answer- ing clients’ needs through a 360° view on real asset investing. In a rapidly evolving environment, the company continues to pursue both its medium and long-term development plans and sees active long-term real asset investment management as its value-added area of growth. It focuses its strategic develop- ment initiatives on the following key areas: 

  • Strengthening its relationship with its clients;
  • Growing its geographic presence;
  • Pursuing selective product line expansion and innovation to meet clients’ needs;
  • Reinforcing its governance, operational excellence and risk management framework.

COMPLIANCE STATEMENT

Restrictions on use

The information, answers, statements and analysis (together the “Material) provided herein by AXA Investment Managers – Real Assets (“AXA IM – Real Assets”) are provided in good faith for the sole use of the company to whom it is addressed and at its sole request. The information contained herein is to be treated as confidential. It is not for use by retail customers under any circumstances. This Material does not con- stitute an offer or solicitation, nor is it the basis for any contract for the purchase or sale of any investment, security or product. AXA IM – Real Assets disclaims any and all liability relating to a decision based on or for reliance on this Material. Analysis and conclusions express the views of AXA IM – Real Assets and may be subject to change without notice. All information, analysis and conclusions herein present AXA IM – Real Assets’ current knowledge and market estimation at the time of its production. Nevertheless, it can come to unintended erroneous statements or presentations and the information may change at any time without previous announcements and/or notices to the recipient of this Material. Thus, a liability or guarantee for the up-to-datedness, correctness and completeness of the allocated information, estima-tion and opinion cannot be assumed. Where past performance, past experience and track record information is provided, this is not necessarily representative of future results: performance is not constant over time and the value of investments may fall as well as rise. No representation is made that any results or other figures indicated in this document will be achieved and that investments will achieve comparable results that targeted returns. Due to simplification, this Material is partial and thus the information can be subjective. The information set forth herein does not purport to be complete and is subject to change without notice.

Responsibility
This document has been prepared and issued by AXA Real Estate Investment Managers, Marketing and Communication Team, Tour Majunga - La Défense 9, 6 place de la Pyramide, 92908 Paris La Defense Cedex.

Sources
The information and data used in this presentation has been sourced from a number of recognised industry providers. We believe it to be accurate and have taken reasonable care to confirm this but cannot offer a guarantee that this is the case. Details of these sources are available on request.

© 2020 AXA Real Estate Investment Managers and its Affiliated Companies. All rights reserved.