Allianz and Columbia Property pool US office assets for new joint venture

Allianz Real Estate and Columbia Property Trust are forming a joint venture to invest in US offices, and have pooled an initial $1.26bn (€1.10bn) of assets they already own into the new company.

The investors said they intended to search for more core, grade-A office assets in central business districts.

New-York based Allianz Real Estate of America, which invests in the Americas on behalf of several Allianz Group insurers, has contributed 114 Fifth Avenue in New York to the joint venture — a 352,000sqft office building in Manhattan’s Flatiron District, valued at $220m.

Meanwhile, Columbia Property Trust, a New York-listed real estate investment trust (REIT), has put two of its San Francisco Bay area properties into the new venture.

These are University Circle, a 451,000sqft office complex in Palo Alto valued at $540m, and 333 Market Street, a 657,000sqft office tower in San Francisco’s financial district, worth $500m.

According to the terms of the agreement, Allianz now owns a 22.5% interest in University Circle and 333 Market Street, while Columbia owns 77.5%.

Columbia will continue to oversee property management and leasing at the two properties, as well as management of day-to-day operations of the joint venture, Allianz said.

Columbia and Allianz each own 49.5% of 114 Fifth Avenue in the new joint venture, while L&L Holding Company — Allianz’s existing partner on the asset — is keeping its general partnership stake and will continue as property manager and leasing agent.

Allianz will increase its stake in both University Circle and 333 Market Street within the next 12 months to 45%, which will cut Columbia’s ownership in the properties to 55% and self-fund the venture for Columbia, the parties said.

Christoph Donner, chief executive of Allianz Real Estate of America, said: “Our investment in this joint venture achieved our immediate goal of acquiring premier office assets in core locations on the West Coast.

“Over the long term, the opportunity to further diversify and expand our national geographic exposure in the US office sector, and to form a strategic partnership with Columbia Property Trust is a win-win situation,” he said.

Nelson Mills, president and chief executive of Columbia Property Trust, said the link-up gave the trust the ideal opportunity to form a partnership with an “exceptional, well-respected organisation” as it increased scale in its core markets.