Allianz aims to capitalise on financing freeze

Against the backdrop of a 'Big Freeze' in real estate financing, Germany’s Allianz Real Estate is steaming ahead with its plans to boost its debt origination portfolio in Europe. After launching its new lending strategy just under a year ago, the Munich-based insurance giant is now gearing up to significantly bolster its portfolio to EUR 5 bn within the next three to five years, the company’s head Olivier Piani reiterated on the sidelines of a press meeting at the ULI annual conference in Paris last week. ‘We aim to originate production of about EUR 1 bn a year.’

Allianz made its first foray into the real estate lending sector last June, with a loan to DWS fund, a subsidiary of Deutsche Bank, totalling some EUR 300 mln. The insurance giant already has a EUR 5 bn loan portfolio in the US which it has accumulated over a period of almost two decades. Its ambitions for Europe indicate the opportunities it sees here in the current climate where overleveraged banks are being forced to shrink their balance sheets and sell their loan books, whether they are performing or not.

Up to now, Europe has been less attractive for real estate financing, Piani said. ‘Higher margins were possible in the US and there was so much competition among European banks that it didn’t make sense to lend here. But all this is changing. The way we see it, debt is not very different to the way we look at equity. With 60% financing and 40% equity, this a risk we fully understand - and we get a 5% yield.’

In 2011, Allianz forked out some EUR 1.5 bn on real estate including debt and equity investments, and aims to boost this figure to EUR 2-2.5 bn in the current year.

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