Allianz Real Estate is partnering with Columbia Property Trust, a New York-based real estate investment trust, to invest in core US offices, the groups said last week.
Allianz, the property investment arm of the German insurer, and its first-time real estate partner Columbia are seeding their joint venture with three buildings that have a total value of $1.26 billion. The groups plan to acquire additional core office properties.
Gary Phillips, Allianz Real Estate of America’s head of acquisitions, told PERE the firm has no set capital deployment target for the JV. However, the firm is looking to invest “several billion dollars more” in the US in the coming years.
“It’s a global objective for Allianz to get greater exposure to real assets, and the US is an important part of that growth trajectory,” Phillips said.
Columbia contributed two of the assets in the JV, both of which are located in the San Francisco area: University Circle, a 451,000 square foot office complex in Palo Alto valued at $540 million, and 333 Market Street, a Financial District office tower valued at $500 million. Through the JV, Allianz now owns a 22.5 percent stake in both buildings, which it will increase to 45 percent over the next year. The firm did not previously have direct exposure to the Bay Area market.
Allianz is contributing one of its New York holdings, 114 Fifth Avenue, to the partnership. The firm partnered with L&L Holding Company to buy the property in October 2015 for $209 million, according to data provider Real Capital Analytics. The 18-floor office building, fully leased with tenants including MasterCard, retailer Lululemon and media company Univision, is now valued at $220 million, Allianz said. The JV partners will each own a 49.5 percent stake, while L&L will retain its 1 percent stake and continue as the property manager.
“For our most efficient tax structure, we’d own less than 50 percent [of the building], and that made the property a prime candidate,” Phillips said. “It’s also a very attractive asset. We felt Columbia was contributing some of their best assets to this venture, and we wanted to do the same.”
HFF advised on the deal.
In the US, Allianz invests in core and core-plus assets across property types in 12 major markets, including New York, Seattle, Chicago and Atlanta, with a 10-year hold period, according to the firm’s website.
In a November interview with PERE, Allianz CEO François Trausch said the firm was aiming to grow its global real estate assets under management by around 25 percent to €60 billion by 2020. Allianz targets a 4-6 percent return annually for its real estate investments.