Allianz seeks to boost retail portfolio

Allianz Real Estate aims to boost the retail share of its portfolio from 19% to around 30% within the next two to five years, CEO Olivier Piani has told PropertyEU.

Allianz Real Estate has big plans for 2014. Fresh from a bumper year during which it invested €3.2 bn in real estate globally, it is now on a mission to invest €4 bn across Europe and the US this year. Here, Olivier Piani, CEO of Allianz Real Estate, tells PropertyEU why he wants to grow his firm’s retail portfolio by €2.5 bn and why Allianz wants to double the number of loans it underwrites this year.

PropertyEU: Allianz invested €3.2 bn in real estate globally last year. What are your investment plans this year? Piani: We would like to invest €4 bn in real estate across Europe and the US this year, of which half would be equity. We’re interested in core and core-plus office and retail assets, as well as multifamily in the US. Our key markets are Germany, France and the US and we are also starting to look again at Southern Europe.

PropertyEU: Do you plan to grow your credit portfolio this year?
Piani: Yes. Last year we underwrote around €1 bn in real estate loans, of which two-thirds was in the US and one third in Europe. This year, we want to double that to €2 bn, of which around half will be in Europe and half in the US. We are also starting to look again at Spain and Italy and around 20% of European loans we underwrite this year could well be there. In terms of what we lend on, we’re generally happy to underwrite loans on the kinds of assets that we also buy, such as core and core-plus offices and retail.
We financed the Königsbau shopping centre in Stuttgart for €145 mln back in January - our first loan of the year. We are currently negotiating several other loans. We typically offer LTVs of between 50% and 70%.
We also want to syndicate our loans more this year across our various balance sheets. For example, last year, we undertook a venture with Altarea Cogedim to acquire 49% of the company for €395 mln. This gave us access to five core shopping centres in France, including centres in Toulouse and Gennevilliers. We then syndicated the loan across the German, French and Italian balance sheets. This was new for us but it allows us to diversify the balance sheets, which is very useful.

PropertyEU: Allianz wants to grow its retail portfolio from 19% of its portfolio to around 30%. How much is this in investment terms and which markets are you most interested in?
Piani: We have €23 bn in equity investments worldwide, so 10% equates to almost €2.5 bn. Last year, we did around €1 bn of retail deals, or four deals. One of the biggest deals was our acquisition of the Silesia City Center shopping centre in Poland from the Immofinanz Group for €412 mln last May. We acquired the 86,000 m2 centre - one of the biggest in Poland - as part of an international consortium. Retail deals can be hard to execute as the correlation between the economy and consumption is not always what you would expect. I think it will take us between two and five years to boost our retail portfolio by €2.5 bn, given that we will also sell some properties during this time. We are especially interested in acquiring shopping centres in Germany, France and Italy, as well as in the US. Last year, we acquired our first retail property in the US when we bought a majority stake in 484-490 Fulton Street, a retail property in Brooklyn, New York, in a joint venture with Crown Acquisitions. Tenants include Swarovski.

PropertyEU: Do you plan to enter any new markets this year?
Piani: Yes, we are looking seriously at China. However, it’s a very local market that is notoriously difficult to crack, so we would look to enter with Chinese partners. Much like in Europe, we would target office and retail properties in major cities. We have also been looking at Brazil but the economy is not performing very well, so I think we will wait. (Brazil’s economy shrank in the third quarter of last year for the first time since 2009.)

By Sara Seddon Kilbinger