Allianz Real Estate has secured its first third-party client for its Luxembourg-based debt fund. Following regulatory approval, German pension fund Bayerische Versorgungskammer (BVK) will co-invest with a EUR300 million stake in a sub-fund valued in total at EUR1.2 billion alongside Allianz. The fund’s strategy will mirror that of the firm’s European debt business and invest in the highest-quality real estate debt from prime borrowers, with senior core/core+ assets located in prime locations in tier 1 European cities.
The development of its third-party business is a key focus for Allianz Real Estate. The partnership with BVK underlines the attractiveness of the product and external investors‘ trust in the firm’s capabilities. It is also expected to accelerate demand from other large institutional clients such as insurers and pension funds to co-invest alongside Allianz in new sub-funds and benefit from its established and successful European debt business.
The firm’s Luxembourg-based debt fund (PAREC) was launched in mid-2018 to simplify access to European debt investments for Allianz group insurance companies. At the end of 2019, the fund had close to EUR3 billion in assets. It has quickly become a core element of the firm’s overall European debt portfolio, which was valued at EUR8.7 billion at the end of 2019, up 10% year-on-year. The PAREC fund offers a highly attractive, innovative structure for Solvency I regulated pension funds such as BVK as well as insurance investors regulated under the Solvency II regime.
Allianz Real Estate has a long-standing relationship with BVK, a highly respected institution with a similar, long-term mind set. In September last year, Allianz acquired an office development in Berlin from developer EDGE Technologies in a forward deal for a joint venture between Allianz group entities and Universal-Investment acting on behalf of BVK. In 2018, the firm provided c. EUR300 million in financing to BVK to support the acquisition of a prime mixed-use asset in Paris.
Annette Kroeger, CEO of Allianz Real Estate North & Central Europe, said: “This is a milestone for our third-party business. We are delighted that our first third-party closing is with BVK, who are a like-minded investor and strong long-term partner, as this underlines our drive to both build expertise and strong relationships across the real estate business.”
Roland Fuchs, Head of European Real Estate Finance for Allianz Real Estate, commented: “Closing our first third-party fund in today’s market is testament to the investment approach that we employ at Allianz Real Estate. Our pan-European origination presence and in-house loan asset management team has enabled us to stay close to our borrowers through 2020’s unprecedented months and to remain open for new prime lending opportunities. A robust investment process alongside the sustainable quality of our portfolio, high underwriting standards and governance and our direct pan-European sourcing expertise have ensured a high level of confidence by both our borrowers and our clients: Allianz and now BVK.”
Reinhold Weger, Head of Fixed Income of BVK, said: “Allianz Real Estate has an exceptional, long-term track record in European debt and the fund represents an excellent opportunity to expand our exposure to quality assets through a co-investment structure. While the wider market has been disrupted by the COVID-19 pandemic, our perspective has always been on the long term, which we view as a core strength of the Allianz proposition.”
The latest loan to be included in Allianz Real Estate’s core debt fund was announced in April this year. The firm provided debt financing for an investment vehicle managed by GLL Real Estate Partners for the acquisition of the Bishop’s Square office asset in Dublin’s CBD. The asset is a grade A, six storey, newly extended and refurbished office building in the south of the CBD in the Irish capital.
