Allianz favours 'go it alone' lending strategy

Allianz Real Estate favours a 'go it alone' approach to real estate lending in Europe, the company's new head of real estate financing in France Carole Van Tran Lieu told PropertyEU. The insurer is targeting a loan portfolio of EUR 5 bn in Europe by 2015.

Allianz is one of the few Continental European insurers prepared to do loan origination from its balance sheet but the company has no plans to enter into syndications with other players except perhaps in club deals, Tran Van Lieu said. ‘We want to be the senior lender to maintain control. When a deal goes wrong, it’s often hard to get consensus from all parties on what to do.’

Allianz’ debt financing strategy is focused on lending to secure core assets that the insurer would be happy to have on its balance sheet, in particular offices and retail. Potential loans are subjected to real estate analyses for possible capital value changes and rental levels as well as returns, Tran Van Lieu said. The maximum LTV is 65%.

Typical maturity terms are seven years or more, she added. ‘Our preferred maturity is 10 to 12 years.’ The long duration narrows the circle of potential clients down to core and long-term investors such as REITS. On the whole, fund managers have shorter horizons, she noted.

The European strategy differs quite significantly from the insurer’s strategy in the US where Allianz has acted as a lender for the past 30 years, she said. ‘In the US we focus on smaller loans, on average in the $25 mln (EUR 19.2 mln) lot size.’ The company’s US lending portfolio currently totals $6.2 bn.

AXA Real Estate is also active on this front and moves have been announced by other players such as Generali but so far no transactions have materialised. UK and US insurers active in the UK are further advanced in this area. Examples include Aviva, L&G and MetLife.