Allianz, the global insurance giant, has signaled its biggest intention yet to ramp up in third-party capital management in the real estate sector by stating it would combine its dedicated property platform with its investment management business PIMCO.
The Munich-based insurer announced today its intention to combine Allianz Real Estate, which manages more than €70 billion of property, largely on behalf of its own entities and affiliates, with PIMCO, which manages approximately €30 billion of property on behalf of both Allianz companies and external businesses.
The merger is expected to take the better part of a year. However, PERE understands formal introductions have already been made at the most senior levels across both businesses.
Allianz Real Estate was part of Allianz Investment Management, which, to date, has been responsible for managing the capital and investments of its internal businesses. In joining PIMCO, Allianz Real Estate now becomes part of Allianz Asset Management. Both Allianz Real Estate and PIMCO are owned by parent entity Allianz SE.
“Bringing two high-performing, complementary specialist parts of the business together puts us in a position to provide customers a more comprehensive solution in real estate capabilities and strengthens our position in alternatives, where we are already among the top 10 global players,” said Jackie Hunt, member of the managing board of Allianz SE.
While the two brands will remain distinctive at least for the coming year, it is understood they will pool resources, notably PIMCO’s third-party distribution network and access to external capital.
“The alliance is very balanced for us as we are complementary in what we do,” commented Francois Trausch, chief executive officer and chief investment officer of Allianz Real Estate. “When we match the Allianz Real Estate global footprint and the Allianz appetite for real estate with the unparalleled access to the PIMCO intellect, research, analytics, focus on performance and, of course, global distribution capabilities, we are destined to become one of the world’s most well-rounded real estate specialists and alternatives experts.”
In real estate, PIMCO is currently best known for its opportunistic and credit strategies in the US and Europe, while Allianz Real Estate is better known as one of the private real estate sector’s institutional investors with exposures to direct and indirect core investments as well as value-add investments in Europe, Asia and the US.
In October 2018, PERE revealed Allianz Real Estate’s plans to start raising capital from third-party investors for the first time, as it worked towards its target of growing assets under management to €100 billion by 2024.
The company chose to open its debt strategy to external investors in the first instance. During 2019, third-party capital providers were invited to invest alongside Allianz in lending transactions originated through a centralized Luxembourg-based debt fund. The fund was established in mid-2018 to simplify access to the lending strategy for the group’s insurance companies.
In August 2019, Allianz made its first equity investment alongside a third-party investor. Structured as a forward-funding deal, it invested in the 650,000 square foot EDGE East Side Berlin office development in the German capital alongside Bavarian pension provider Bayerische Versorgungskammer.
“Real estate has been, and will continue to be, central to the development of our private strategies platform, which we consider essential to providing our clients with alternative approaches to achieving their long-term investment objectives,” said Emmanuel Roman, PIMCO’s chief executive officer. “By incorporating Allianz Real Estate into PIMCO’s existing suite of private solutions, we intend to significantly enhance our capabilities in an area that has becomes a critical component of our clients’ portfolio.”
Additional reporting by Daniel Cunningham.