AXA invests billions in alternate point of view
The Scape student accommodation development on Franklin Street in Melbourne. Photo: Supplied

AXA invests billions in alternate point of view

Money is no barrier if the opportunity is right, says Kumar Kalyanakumar, head of Australia, real assets, for AXA Investment Managers, which is going hard into healthcare, student housing, logistics and residential.

AXA has shifted its focus away from office and retail – it manages investments in major assets such as 101 Collins Street in Melbourne and Indooroopilly Shopping Centre in Brisbane – to alternate assets, and is also bidding for major funds management roles.

“We like beds, sheds and meds,” said Mr Kalyanakumar.

Beds came first with the French multinational partnering in a consortium that has invested $3.2 billion into the student accommodation consolidator Scape, most of which was used to fund its acquisitions of competitors Atira and Urbanest.

Logistics is also a focus, with Mr Kalyanakumar confirming AXA is in advanced discussions to buy a share of a major portfolio – just two months after narrowly missing out on Milestone Logistics, which sold for $3.8 billion.

He said AXA was expanding its healthcare portfolio, spending $150 million on the development of a medical precinct in Melbourne, and investigating the best way to invest in Australia’s build-to-rent sector.

“Our view is that alternates such as healthcare, student housing, residential, logistics, data centres and life sciences are the sectors that will provide superior risk-adjusted returns,” he said.

Mr Kalyanakumar said there was heavy investor demand for alternate assets and AXA was sourcing capital from its parent company as well as local and international investors.

As a result, “there’s no real limit” on the amount AXA’s Australian team has to invest, rather it’s all about the opportunity.

“The traditional way of doing it is people set up a blind fund and then look for investments,” he said.

“We’re doing it slightly differently because sometimes the opportunity comes first and then the money will come.

“Having that parent balance sheet is a very big positive for us to capitalise on those opportunities.”

Mr Kalyanakumar said AXA had $6.5 billion of assets under management in Australia, including a growing healthcare portfolio.

“We have a day hospital in Brisbane, we have a private hospital in Townsville, we have a healthcare precinct in Melbourne that we are developing for an operator,” he said.

“And we have a pipeline of deals that we are assessing. They are existing assets, either private hospitals or aged care facilities.”

Increased competition for healthcare assets has forced prices up and yields down by around 100 basis points “and firming” over the past two years, he said.

But they still offered good value around 5 per cent. “When you look at the ageing demographics in this country, demand for healthcare, demand for aged care, demand for retirement are on the increase.”

AXA has also thrown its hat into the ring as a contender to manage AMP Capital’s $7 billion office fund. “It’s a complex process and I don’t know where it’s going to finish up,” Mr Kalyanakumar said.

“We’re pragmatic about what the potential could be. There’s some really good assets in that.”

His faith has been tested in student housing, which has suffered due to border closures, but remains positive about the long-term future.

“Scape is working very closely with the universities and governments to get students back here,” he said.

“We need to have some certainty around where the borders are open.”

And when the borders do open, he believes students will return.

He said AXA, which is a big residential investor in Europe, was keen to get involved in the build-to-rent sector in Australia.

It regularly fields pitches from local operators, but Mr Kalyanakumar has quality control concerns and is considering taking the operational lead if it can’t find the right partner.

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