The real estate business of German insurer Allianz has grown its global portfolio to €50 bn following almost €6 bn of new investments in 2016.
'2016 was a very active year for us,' said Francois Trausch (pictured), CEO of Allianz Real Estate. 'Given the ongoing low interest rates, the Allianz companies continue to find real estate an attractive investment opportunity. We have expanded our portfolio strategy to 24/7 megacities such as New York, Shanghai and London, as well as regionally to Asia Pacific and Iberia. Over 2017 we will look to further diversify our portfolio geographically and product wise,' he added.
Direct and indirect equity investments
The direct and indirect equity investments carried out by Allianz RE and its national businesses in Germany, France, Italy, Spain, Switzerland, the US and Singapore totalled €3 bn in 2016, leading to a total of €35.3 bn of direct and indirect equity investments managed at the end of the year. The business delivered occupancy levels of 95% in its direct property assets.
In Ireland, Allianz secured a 50% stake in the retail asset Dundrum Town Centre, alongside Hammerson, following the acquisition of the Project Jewel loan portfolio in 2015. Dundrum Town Centre is located in Dublin and one of Ireland's most renowned shopping and leisure centres. Other investments in shopping centres were closed in Wiener Neustadt, Austria (Fischapark) and Bratislava (Central Shopping Centre).
Indirect exposure expanded over the period, with the firm's first investment into student housing in Continental Europe alongside German operator IC Campus. In logistics, Allianz RE and pan-European real estate group VGP agreed to fund a 50:50 joint venture with an overall equity investment volume of €500 mln. The assets, which will be developed by VGP, will be located in Germany, the Czech Republic, Slovakia and Hungary.
Olivier Téran, chief investment officer, noted that Allianz RE planned to continue the strong performance of the last 12 months. '2016 saw us strengthen our market position by developing new joint ventures or nurturing existing partnerships with leading actors in their respective regions or segments. For 2017, we are looking into further developments in Asia – particularly China and India – but office and logistics opportunities in Western Europe will remain at the heart of our investment strategy.
'2017 has had a strong start, with our purchase of the office project development Kap West in Munich, the consolidation of our investments with Prologis, and the expansion into global opportunistic strategies. Lastly, our involvement in the financing of London’s Citypoint is an early footstep in the UK, allowing us to deepen our understanding of the market before making our equity debut,' Téran added.
Senior financing deepens UK footprint
Allianz RE also increased its lending activities in 2016. On behalf of two Allianz entities, Allianz RE participated for an undisclosed amount in the senior financing of the London landmark CityPoint, arranged and underwritten by Morgan Stanley and sponsored by Brookfield Asset Management. CityPoint Tower is a 36-storey office building located in the City of London. The skyscraper comprises 66,000 m2 with a 90% occupancy rate and is leased to a range of tenants, including international law firms.
The transaction was part of Allianz RE's roll-out strategy to grow its debt exposure in the UK. The overall lending strategy for the UK will focus on core office, retail and logistics assets with strong sponsors. Roland Fuchs, head of European debt for Allianz RE, commented: 'For Allianz Real Estate this is the first single asset real estate debt transaction in the UK, and represents a stepping stone towards our overall UK lending strategy. The implementation of our UK strategy will lead to further diversification of our European debt portfolio.'
Senior financing grew by €900 mln in Europe, increasing the AUM of Allianz's debt portfolio to €14.7 bn. In addition to growth in the UK, long-term financing was delivered for the acquisition of the IZD Tower, a high-rise office building in Vienna, Austria and the co-financing of a pan-European portfolio, covering 27 locations across seven countries, to Invesco Real Estate where Allianz's share amounted to €366 mln.
