New investments of EUR8.9bn in 2017 - the highest annual volume in Allianz’s history / Asia-Pacific business grew to EUR1.9bn with high profile transactions in India and China / Renewed focus on European office investments in 2017 with large forward transactions completed in Munich, Milan and Vienna
2017 was a record year for the real estate investments of Allianz, following the strategic target to expand investments in alternative asset classes. Allianz Real Estate expanded the global presence and continued to diversify across direct and indirect equity and debt asset classes. Assets under management stood at EUR56bn at the end of 2017, with new investments of EUR8.9bn. Including sales, the total transaction volume for real estate amounted to EUR10bn.
François Trausch, CEO Alianz Real Estate
“Real estate remains a very attractive asset class for Allianz,” said Francois Trausch, CEO of Allianz Real Estate. “We continue to grow and diversify our global portfolio, not only in our established markets in Europe and the US, but also by expanding our footprint in Asia with significant investments in India and China. We target EUR75bn in assets under management by the end of 2020.”
Strong growth of equity investments
New equity investments carried out by Allianz Real Estate in 2017 showed strong growth and totalled EUR5.2 billion euros, with EUR 2.6bn in direct and a further EUR2.6bn indirect investments via funds and joint ventures. The total equity portfolio rose to EUR40.2bn: EUR31.0bn in direct and EUR9.2bn in indirect investments. Indirect equity accounted for 16% of Allianz Real Estate’s portfolio allocation as at the end of 2017.
“Partnerships are a core element to the way we do business and 2017 saw us deepening relationships with a number of third party managers and joint venture partners. This approach enables us to increase our exposure to new markets and fast-growing sectors such as logistics and student housing,” commented Olivier Téran, Chief Investment Officer of Allianz Real Estate. “We also added a number of new strategies to our portfolio in 2017, investing for the first time in India and seeing new debt and equity in the UK already bearing fruits. This continues in 2018 where we will be looking to increase exposure to direct and indirect Value Add segments.”
Expanding role of debt
In addition, the firm saw increased activity on the debt side. Senior financing grew by EUR3.7bn – up EUR1.8bn in the US and EUR1.9bn in Europe – increasing Allianz Real Estate’s overall debt portfolio to EUR16bn. European Debt exceeded EUR6.3bn while the US debt portfolio amounted to EUR9.9bn. Key debt investments included prime office buildings "Window" in Paris, and “Atrium” in the Netherlands; 55 Baker Street, a mixed-use building in London and Miami South Beach's 1111 Lincoln Road.
Roland Fuchs, Head of European Real Estate Finance for Allianz Real Estate, commented: "European debt played a central role in our asset growth in 2017 with a number of landmark deals for our Pan European portfolio. The development of our UK strategy has led to further diversification of our European debt portfolio, and the UK remains a market of interest for us going forward.”
Growing equity and debt business in the US
Alongside its strong US debt business, Allianz Real Estate also saw substantial growth in its US equity investments through the acquisition of a 43% stake in 1515 Broadway, a class A mixed-use building, located in New York's Times Square, and the formation of a key partnership with Columbia Property Trust, established to pursue the acquisition of Class-A office properties. AuM in the US increased to EUR14.3bn at the end of 2017 following the origination of EUR2.9bn in equity and debt investments.
Christoph Donner, CEO of Allianz Real Estate of America: “Our new investments are underscoring the importance and attractiveness of the US market. For future growth and diversification, we opened additional regional offices in Atlanta and Los Angeles to more effectively identify high-potential opportunities nationwide.”
Expansion of Asia Pacific portfolio
In 2017 Allianz Real Estate started to invest more broadly across the Asia-Pacific region. The business grew from EUR500m in 2016 to EUR1.9bn at the end of 2017. Allianz Real Estate completed its first transaction in India through a partnership with Shapoorji Pallonji Group, targeting Indian office markets. Allianz also invested in an outlet fund with TH Real Estate in China, in a mixed-use development in Shanghai´s Hongkou District and in a logistics fund with Redwood focused on the fast-growing logistics sector in Japan.
Rushabh Desai, CEO of Allianz Real Estate Asia Pacific: “Fast growing economies like China and India now account for more than half of our investments in the region, with the rest split between Australia, Japan, Singapore, Korea and Hong Kong. We expect to increase our allocation to Asia Pacific beyond our current 5% of the global portfolio.”
Europe, the evolving continent
New equity investments in Europe amounted to EUR3.1bn. Besides core investments like the acquisition of the prime office complex Vertigo in Luxemburg, Allianz Real Estate started to invest in “Forward Deals”, core projects that are in the construction phase and have not yet been completed. Investment examples include the prime office projects “The Icon” in Vienna “Kap West” in Munich and the new ENI headquarters in Milan.
Annette Kröger, CEO of Allianz Real Estate North & Central Europe. “With new investments of nearly EUR1bn in our region we can look back on a very successful year 2017. Our ambitions for the coming years see us planning new offices in Austria/CEE and the Nordics to support in further managing our diversified portfolio as well as introducing new strategies. Forward Deals played an important role in 2017’s growth. Entering projects at an early point in time enables us to source additional value for our investors by working with development partners on high quality real estate in prime cities.”
As a long-term investor, Allianz is known as a landlord that constantly evolves its buildings to the needs of its tenants and their communities. 2017 saw the group announce considerable renovations to the prestigious Haussmann building “16 George V” in Paris as well as the redevelopment of the former Allianz headquarters in Trieste, which will become a hotel. In 2018, Allianz Real Estate plans to build on this expertise by introducing a Value Add strategy to acquisitions.
Alexander Gebauer, CEO of Allianz Real Estate Western Europe: “Our holistic approach to West Europe alongside our offices in Paris, Brussels, Milan and Madrid enable us to further expand in this region and to identify investment opportunities in a very early stage. The strength of our asset management teams on the ground positions us well to source and manage Value Add opportunities in 2018 and beyond.”
Key Figures of Allianz Real Estate, 2017
| Total AUM/New Investments | December 2017 | |
| Total 2017 | New 2017 | |
| Total AUM | €56.0bn | €8.9bn |
| Equity portfolio | €40.2bn | €5.2bn |
| Direct Equity | €31.0bn | 2.6bn |
| Indirect Equity | €9.2bn | €2.6bn |
| Financing portfolio | €16.2bn | €3.7bn |
| European Debt | €6.3bn | €1.9bn |
| US Debt | €9.9bn | €1.8bn |
| Sales | €1.0bn | |
