Allianz is expanding its €700m Asia-Pacific logistics portfolio with two new investments in India and China.
The German insurer’s €60bn real estate investment arm has entered into a partnership with the Hong Kong-based Gaw Capital to acquire a portfolio of core modern logistics across China.
Allianz Real Estate has also committed to 50% of start-up capital of US$225m (€198.3m) with the pan-Asian logistics group ESR to develop facilities across India.
The transaction cost of the Chinese logistics assets was not disclosed, but IPE Real Assets understands that the deal was done on a “5.5% to 6%” yield.
The portfolio has some 375,000sqm of lettable space. In the current market in China, logistics assets are trading at US$450 to US$500 per square metre.
Speaking to IPE Real Assets, Rushabh Desai, CEO Asia-Pacific at Allianz Real Estate, said the co-investment with Gaw was a stabilised portfolio and would provide “a nice balance” to its first logistics investment in China.
Desai said Allianz had currently invested in a development platform with other partners managed by Brilliant, a Chinese group. The platform has equity of US$350-US$400m.
With the investment with Gaw, Desai said Allianz was close to achieving its “intermediate goal” of having a billion-euro exposure in Chinese assets, including logistics.
In India, Allianz has entered its second real estate investment programme. The manager’s first real estate transaction in the country was made last year when it partnered with Shapoorji Pallonji to set up an office fund.
The deals forms part of Allianz’s strategy to allocate around 50% of its Asia-Pacific real estate investment exposure to growth markets.
Desai said Allianz would take a step-by-step approach in India. The Indian market was just starting to become institutionalised, but was a market rich with potential, he told IPE Real Assets.
Allianz would build up its investment in India as its logistics sector continued to develop and grow. He envisaged a time in the near future when its joint investment programme would reach the billion-dollar mark.
Desai said the tax overhaul which the Indian government brought in last year had led to the consolidation of India’s logistics sector.
The Allianz programme’s strategy was to acquire a blend of develop-to-core, forward purchases, and stabilised or stabilising assets in eight key target cities, including Mumbai, Pune, Chennai, Bangalore, and the capital, Delhi.
“This is the second time we have collaborated with ESR in the Asia-Pacific region. They have built a best-in-class team in India to take advantage of the favourable environment for logistics. The pipeline indicates a strong start to the programme.”
Allianz is also an existing investor in ESR’s development programme in Japan.
Charles de Portes, co-founder and president of ESR, said: “Since 2016, we have been focussed on bringing our integrated development and fund management platform to India to service the country’s growing demand for modern logistics facilities.
“We wanted to have a pan Asia logistics investment and we now have invested in the region’s key markets - China, India, Japan, and Australia.”
Desai told IPE Real Assets that Allianz’s investment in Asia Pacific is around 5% of its global real estate portfolio, with plans to lift the allocation to the region to 10%.