Allianz announced today that it is investing in KaiLong Greater China Real Estate Fund II (“KGCREFII”), a closed-ended fund targeting value-add commercial real estate opportunities in China and Hong Kong. Allianz will take a 35% share in the fund, and the remaining will be held by like-minded long-term institutional investors. KaiLong is targeting to raise USD 500 million in equity.
This transaction was conducted by Allianz Real Estate, the EUR 60 billion real estate investment and asset manager within the Allianz Group, on behalf of several Allianz companies. This deal forms part of Allianz’s strategy to allocate around 10% of its global real estate portfolio to the Asia Pacific region.
“We are looking to deploy approximately 50-60% of our Asia-Pacific allocation to growth economies. Strong secular growth, continued urbanization, the transition to a service-oriented economy, and improving transparency are supporting stable real estate occupiers as well as investor demand in China,” noted Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate. “We have partnered with the best-in-class local operator to take advantage of these demand fundamentals. KaiLong has a strong and successful track record in the value-add space in China and Hong Kong.”
KaiLong Group, a privately-owned real estate asset manager, was founded in 2004. It manages real estate funds with multiple strategies, including this value-add fund that Allianz is investing in. It specializes in repositioning and renovating commercial office space as well as converting old and undervalued real estate into modern offices. Currently, it manages USD 1.7 billion in assets under management.
Hei Ming Cheng, Chairman and CEO of KaiLong Group, said, “We view this partnership with Allianz as the first step in a relationship which will focus on creating long-term value for investors and will be supported by KaiLong’s substantial credentials and experience in delivering and managing real estate assets across the Greater China market.”
Clifford Chance and Ernst & Young acted as advisors to Allianz.