Allianz: ‘We will definitely be a net buyer in 2015’

Allianz Real Estate Germany will continue to seek growth in its target markets despite challenging conditions, says its new CEO Annette Kröger.

Annette Kröger took up the reins as the first female chief executive of Allianz Real Estate Germany in April, succeeding Stefan Brendgen who left the company last summer. Kröger joined Allianz in July 2009 as head of investment management and went on to be appointed head of international asset management. She previously worked at Goldman Sachs in the UK and Germany for several years, focusing on the Whitehall Real Estate Funds. Here, she talks to PropertyEU about the priorities in her new role.

What are your immediate priorities as the new CEO of Allianz Real Estate Germany?
Kröger: In today’s low interest environment, many investors including Allianz Group are keen to increase their exposure to real estate and as such the growth of the real estate portfolio continues to be a priority for Allianz Real Estate and Allianz Real Estate Germany. This will remain a key focus and priority for me as well. At the same time, strong asset management is required to drive performance and identify opportunities within the portfolio. This will be of equal importance for me in my role at Allianz Real Estate Germany.

What do you see as the main challenges facing the German and European real estate industry over the next 2 years?
Kröger: As a consequence of the strong demand for attractive property investments, real estate prices remain high or are even increasing. On the other hand, the economic environment is expected to see stable but subdued growth. This will ultimately limit dynamics on the occupier side in many markets. The key challenges will be to remain sufficiently cautious in investment decisions and to identify the right products to acquire. At the same time, it is key to actively manage existing portfolios to drive performance through commercial letting, a client-oriented support for current and prospective tenants, continuous optimization of properties, and a strong cost and revenue management.

Can you outline Allianz Real Estate Germany’s investment strategy for the next 1-2 years?
Kröger: The aim is to continue to grow our real estate portfolio, targeting core assets in good locations. While we are looking for stable cash flow, we are also broadening our profile and looking to acquire assets in good locations that require some asset management attention and therefore offer some upside potential as well.

Which markets/sectors are you targeting?
Kröger: Our focus continues to be on office and retail properties with a geographic focus on Germany, Austria and the Nordics. With regard to retail we are also looking at CEE and Ireland.

Allianz Real Estate bought more property (€4.2 bn, direct, indirect, financing worldwide) than it sold (€700 mln) in 2014. Do you expect to be a net buyer again this year or a net seller?
Kröger: Definitely a net buyer. In 2015, our focus is on further expanding our portfolio, and currently our pipeline is appropriately filled to do so. The large sales programme we launched several years ago was aimed at repositioning our portfolio by selling smaller assets that do not fit into our strategic focus anymore. This sales phase has been completed and we will only selectively sell assets out of our portfolio in the coming years.

Already in 2012 at Expo Real, Stefan Brendgen said it was getting increasingly difficult to find affordable product in Germany due to the amount of capital chasing real estate. The market has become even more crowded since then. How is Allianz Real Estate dealing with this?
Kröger: It is correct that yields have further compressed since 2012 and the search for attractive investment opportunities is becoming ever more challenging. Despite these circumstances we were able to execute attractive acquisitions over the last two years such as Skyper in Frankfurt, Isartor City in Munich, and Silesia in Katovice. We are confident about our ability to execute similar investments in the future. Additionally, we have slightly broadened our profile on the direct investment side, continue to screen new potential markets and segments and as a group place a stronger focus on debt and indirect investment.

In 2013, Allianz said it was targeting a €5 bn real estate debt portfolio by 2017. The European portfolio is currently at over €2.1 bn. Is expansion on the cards in this area?
Kröger:This business is a strong growth area for Allianz Real Estate, so expansion is definitely on the cards. We currently have an overall real estate debt portfolio of €8.4 bn worldwide and have already executed some transactions this year like the financing of the Alster Arcaden in Hamburg, the Marineda Shopping Center in La Coruna, and the office building 92 Avenue de France in Paris.

How do you feel about becoming the first female chief executive of Allianz Real Estate Germany?
Kröger: I believe that a diverse workforce at all levels is beneficial for a company and hope that there will be more female executives to follow within the Allianz Real Estate Group.