Allianz Real Estate has raised US$2.3bn (€2bn) for its first-ever third-party real estate fund, securing capital from South Korea’s National Pension Service (NPS) to invest in core assets across Asia-Pacific.
Allianz Real Estate Asia-Pacific Core I, a closed-ended fund domiciled in Singapore, will be owned 50-50 by NPS and Allianz companies, and Allianz Real Estate will serve as investment manager and general partner.
The announcement comes a month after German pension fund Bayerische Versorgungskammer was revealed as the first third-party investor to take part in a real estate debt fund managed by Allianz Real Estate.
Allianz Real Estate, which has historically invested exclusively on behalf of Allianz companies, has been planning to move into third-party fund management by setting up joint ventures and funds with individual investors. Last year, CEO Francois Trausch told IPE Real Assets that Allianz Real Estate was aiming for 10% of its assets under management to be derived from non-Allianz capital within five years.
Today, Trausch said the new fund was “a significant step forward in our ambition of bringing like-minded third-party investors to invest alongside Allianz”.
He said: “We view this as the beginning of a scalable partnership between NPS and Allianz, two highly-respected long-term institutional real estate investors.”
NPS CIO Hyo-Joon Ahn said it was “an excellent opportunity to expand our exposure to quality assets” in Asia-Pacific.
Rushabh Desai, CEO of Allianz Real Estate Asia-Pacific, told IPE Real Assets: “As like-minded long-term global investors, we regularly interacted with NPS and exchanged views on the various markets.
“Both NPS and Allianz understand the Asia-Pacific market well. We have very similar investment objectives. One of the key objectives for pension funds and insurance companies is to secure sustainable, stabilised income over a long period of time.”
Desai said both organisations stood to benefit from diversification and their combined scale. “Instead of the investor having 100% interest in a $1bn investment, they would now have a 50% interest in $2bn worth of investments.”
The fund will invest in Australia, Japan, Singapore, Hong Kong and China with a focus on offices, logistics, multifamily and student housing.
Desai said the objective was not to sell down Allianz’s existing US$6bn real estate portfolio in the region. “We are not looking to recapitalise our existing book,” he said. “We have built an attractive pipeline and would look to secure that for the partnership.”
Asked if the size of the partnership would preclude Allianz forming partnerships with other third parties, Desai said: “Allianz invests across the risk-return spectrum – core, value-add and opportunistic. [The fund] will focus on core opportunities in Asia-Pacific, and if there are opportunities outside the mandate of this vehicle, where it makes sense, we would welcome a partner.”
He said it wais likely to be the “largest closed-end diversified core fund in Asia-Pacific”. He added: “If you include the open-end diversified core funds, it will probably be the second-largest.”
He said COVID-19 had highlighted the importance of diversification, and individual markets in Asia-Pacific were operating at varying paces. “This is all the more reason it is critical to have diversity in our investment within the region,” he said.
The pandemic had also accelerated secular macro-economic trends, he said, such as adoption of technology, urbanisation into cities with superior healthcare services and better infrastructure and localisation of supply chains.
“We are learning to operate in an uncertain environment, and continuing to build our portfolio in a disciplined manner,” he said.
