Allianz announced today that it has partnered with TH Real Estate to establish ERES APAC II – China Outlets, a core-plus, closed-ended USD-denominated fund focusing on premier outlet malls in China.
The transaction was executed by Allianz Real Estate, the USD 63.5 billion (EUR 53 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 five percent of its global real estate portfolio to the Asia Pacific region.
ERES APAC II-China Outlets is targeting to raise USD 750 million (EUR 640 million) of commitments initially to acquire two stabilized outlet malls - Florentia Village Jingjin (located between Beijing and Tianjin) and Florentia Village Shanghai. Allianz will be the anchor investor owning 30% of the platform and the remainder will be held by like-minded long-term institutional investors, such as TH Real Estate on behalf of TIAA, etc. TH Real Estate will also act as the Fund Manager and RDM Asia (part of the Fingen Group of Italy) will manage the assets.
This China platform marks an expansion of the relationship between Allianz and TH Real Estate and an extension of their joint investments into outlet malls following a similar platform in Europe established in 2004 and a UK platform in 2008.
Rushabh Desai, Asia Pacific CEO of Allianz Real Estate, noted, “China is moving towards a services and domestic consumption led economy. Alongside the traditional ‘bricks and mortar’ retail formats, outlet malls have been successful in attracting buyers looking for branded products at discounted prices. RDM Asia has implemented a unique single point-of-sale operating model and has done an excellent job to stabilize the Jingjin and Shanghai assets. We have a strong partnership with TH Real Estate in Europe and in the US and are very happy to be associated with them in China. We look forward to replicating our European outlet mall performance in China.”
TH Real Estate is increasingly active in the region. Including ERES APAC II – China Outlets they have USD 2.4 billion assets under management in Asia Pacific.
Chris Reilly, Managing Director, Asia Pacific at TH Real Estate, commented, “The success of this first close demonstrates the wide appeal of our China Outlet Mall strategy, offering investors an exclusive opportunity to invest in premier designer outlet malls in China. We have seen this niche sector continue to gain in popularity with China’s brand conscious consumers.”
Reilly said, “Seeded with two leading designer outlet malls, the fund has also identified a future pipeline of assets. TH Real Estate is a global leader in luxury outlet malls and investors will benefit from the team’s proven track record in this sector.”
Desai added, “As part of its diversification strategy, Allianz is looking to build an institutional-grade portfolio of commercial and logistics assets in China. Co-investment in Shanghai's Hongkou SOHO in August and now this fund have been part of this approach, and there will be more to come.”