Allianz Real Estate, acting on behalf of several Allianz Group companies, has agreed to acquire a 49% interest in a logistics portfolio as part of the establishment of a joint venture partnership with Crow Holdings.
Ground images: Paul Golangco, Paul Go Images / Aerial images: Squire Haskins Inc
Through the long-term joint venture, Allianz and Crow Holdings will own and complete development of the 6.1m sq ft. build-to-core portfolio, consisting of 19 newly-constructed industrial assets, anchored by a logistics park located between Dallas and Fort Worth. The remainder of the portfolio is concentrated in prime locations in Chicago, Dallas, Houston and Southern California. Further to the strategic locations, five of the 19 assets are in different stages of development.
The transaction aligns with Allianz Real Estate’s focus on long-term logistics portfolios comprised of modern, top-quality assets that are well located within their respective markets. This direct investment with Crow Holdings, an existing capital partner and real estate developer with over 70 years of experience in the U.S., also supports the investment approach of establishing and growing strategic platforms alongside successful partners who are leading experts in their field.
Allianz Real Estate has increased its U.S. logistics exposure in recent years, following a shift in U.S. consumer behavior, supply chain rationalization and overall sector tailwinds. Tenant demand has grown largely due to U.S. consumers’ migration from bricks-and-mortar retail to e-commerce, a fundamental trend that has accelerated significantly during 2020’s Covid-19 pandemic.
88% of the jointly-held logistics portfolio is in Texas, with 74% in Dallas and 14% in Houston. Both cities are well-positioned given that the Panama Canal expansion has allowed for a significant increase in containers traffic. The Dallas/Fort Worth industrial market is supported by an intermodal infrastructure, business-friendly policies, a growing population, access to Houston’s port as well as the fourth largest airport in the U.S. The remainder of the portfolio is divided equally between Chicago and the Inland Empire. The Inland Empire in California serves 23m residents and is one of the most prominent distribution hubs in the West Coast with nearly 40% of the nation’s goods flowing through its borders. Finally, Chicago is the central point of distribution in the U.S., servicing 25% of the U.S. population. Local infrastructure offers robust rail, road, and air connectivity to position the market as a key transportation and shipping hub for industrial users in the Midwest.
Allianz Real Estate places considerable emphasis on ESG factors within its portfolio, supporting its ambition to become carbon neutral by 2050. With this in mind, 12 properties to be contributed as part of the Class A industrial assets have either LEED Certifications or LEED Certifications pending and comply with city ESG guidelines.
Karen Horstmann, Head of Acquisitions, Allianz Real Estate of America, added: “If one segment of real estate has clearly benefited from the pandemic it has been logistics. To put it in perspective, for each US$1bn in incremental e-commerce sales growth there is a need for 1.25m square feet in distribution space. The U.S. warehouse inventory reserve additionally needs between 700m-1bn square feet to keep up with demand for space. We believe the logistics segment, which has been an area of considerable focus for Allianz Real Estate in the U.S., Europe and Asia, will remain resilient due to strong, persistent market fundamentals, the continued expansion of e-commerce and consumer delivery demand, and supply chain rationalization.”
“Partnering with Crow Holdings - a trusted partner for several years on both the debt and equity side – allows us to grow alongside a developer that understands the dynamics and needs of the U.S. market,” said Christoph Donner, CEO of Allianz Real Estate of America. “Allianz remains focused on long term opportunities making this investment an excellent fit for our portfolio. Crow Holdings’ decades of experience and track record give us the confidence to further expand our joint platform.”
“By analyzing tenant demand patterns in major U.S. logistics hubs, Crow Holdings successfully assembled and developed this long-term, build-to-core portfolio of high-quality industrial properties. We continue to build upon our strategy of establishing trusted partnerships with premier institutions to capitalize on the long-term secular growth of e-commerce. We are excited to partner with Allianz Real Estate, a top-tier global investor that shares our confidence in the U.S. industrial real estate sector, on this venture. As a longstanding partner to Crow Holdings, we look forward to continuing to work with them to optimize these assets, which benefit from the major tailwinds of increasing logistics demand,” said Michael Levy, Chief Executive Officer of Crow Holdings.
