Expo Real: Allianz RE to invite pension funds onto debt platform
Allianz Real Estate will be opening its newly created debt fund to third-party investors, “particularly pension funds and smaller insurers”, the company announced on the last day of Expo Real in Munich.
“In the past, we have been approached by many smaller institutional investors either not willing or able to build their own expertise in the debt segment about co-lending,” Roland Fuchs, head of European debt at Allianz Real Estate, told IPE Real Assets after the press conference.
Next year, “a select group of institutions particularly pension funds and smaller insurers… most likely” based in Europe will be approached to assess the demand for co-lending alongside Allianz RE, he said.
The idea is to take third parties on board as equal partners but still having Allianz RE as the majority lender.
“Taking on board other investors will not change our principle debt outlook or our focus on prime opportunities, the asset quality or the location,” Fuchs explained.
He confirmed that the other investors will be given the same level of loan seniority that Allianz RE is prepared to take in a deal.
Asked about fee structures and ticket sizes, Fuchs noted it was “too early” to talk about such details.
“First we are going to hold talks to assess investor demand,” he said.
The Luxembourg debt platform was launched in September and it was the first time assets from all Allianz Group subsidiaries were pooled for debt investments.
Fuchs said going forward the Luxembourg fund will still primarily serve Allianz Group companies as a vehicle for debt exposure.
So far, two financing projects have been realised via the platform: St. Katharine Docks in London and the refinancing of Noventa di Piave in Italy.
Currently, almost €18bn of Allianz RE’s €60bn real estate exposure is in debt.
Francois Trausch, the CEO of Allianz RE, said: “Going forward, we want to reach €100bn in total over the next five years and keep that debt to equity ratio.”
He added that, in the current market environment with banks shrinking their lending exposure, “there is no better product than lending for insurers”.
For Allianz RE, debt investments are also a means to maintain exposure in markets in which equity exposure might not be deemed feasible at the moment.
One case in point currently is London. “We have a positive view on London, especially in the student housing and certain residential sectors as well as logistics,” Trausch said.
For offices, however, “there is a question mark regarding pricing”, he added.
“Therefore we decided to concentrate on senior lending until we have a better assessment of the market after knowing the outcome of the Brexit negotiations.”