As arguably the U.S.’s oldest ally, France continues to find America to be an intriguing market for commercial real estate investments. Investors from France spent a total of $765 million on U.S. properties from third-quarter 2020 through second-quarter 2021.
This amount may seem subdued, but it equates to a jump of 60% by French investors from the previous 12-month period, according to Real Capital Analytics (RCA). And it came at a time when European buyers largely stayed away from the U.S., with acquisitions falling to a fraction of what they were only a year earlier.
French cross-border investments into the U.S. amounted to 2% of the overall volume by foreign companies during this four-quarter period. Its $765 million in deal volume placed France 12th among all foreign sources of capital and fourth among its fellow European countries, trailing only Germany, the United Kingdom and Switzerland.
French investors took part in a total of 34 deals during these four quarters, making their biggest splash in the industrial sector. AXA Group took the bow in this sector by spending $721 million, the second most of any foreign buyer of industrial properties during this period. AXA, a diversified insurance and investment corporation, also accounted for the lion’s share of all deals originating from France during this time. Otherwise, French companies did not appear in the top 10 rankings of buyers for any other property category in RCA’s second-quarter 2021 report.
AXA Investment Managers, a division of the AXA Group, has been plenty busy of late with deals not publicized by RCA. In December 2020, it acquired nearly 8 million square feet of industrial and logistics space from Cabot Properties for an estimated $875 million. This was one of the largest industrial-portfolio transactions of the year and consisted of 27 properties in a variety of U.S. locations, ranging from South Florida to Southern New Jersey, Atlanta, Houston, Chicago and Los Angeles. According to Real Estate Weekly, the transaction expanded AXA IM’s worldwide logistics portfolio at the time to 41 million square feet in 10 countries. The portfolio was worth an estimated $3.5 billion.
But it turned out that AXA IM was just getting started. In September 2021, the company acquired a 271-unit apartment tower in the fast-growing Houston suburb of Katy, Texas. The development is about 30 miles from Houston’s central business district.
This past December, AXA IM, along with clients and partners, made one the largest deals of 2021 when it finalized a two-stage agreement valued at $2.05 billion to acquire a 32-asset portfolio of industrial sites. The first phase of the deal called for AXA to acquire 23 of the sites owned by Dermody Properties for $1.2 billion. In the second phase, AXA will acquire nine more industries properties for $850 million. These assets are scheduled to be completed in 2022 and 2023. The 32 properties are located throughout the U.S. in 11 primary industrial markets, including Atlanta, Chicago, Las Vegas, Northern New Jersey and Seattle.
At the beginning of 2022, there was no sign that the well-funded AXA IM (with about $168 billion of real estate assets under management) will slow its acquisitions of U.S. industrial and logistics properties. It remains to be seen, however, if other French investors will follow AXA’s lead. ●