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Allianz’s target-hitting momentum progresses with $2.3bn NPS tie-up

The Munich-based insurer is closer to its aim of having 10% of its private real estate assets managed on behalf of external investors within the next five years.

The real estate business of German insurer Allianz has been no stranger to beating its growth targets of late.

In a 2016 interview with PERE, chief executive Francois Trausch said he expected to see the business’s assets under management grow from €45 billion then to €60 billion by 2020. That was achieved 18 months ahead of schedule, allowing Trausch to then say at the PERE Europe Summit in 2019 that the new target would be €100 billion by 2024. At year end, the total had reached just shy of €75 billion.

On PERE’s stage, Trausch also talked about how the insurer would get there, in part by adding third-party investments to its asset base. Another target has been set to achieve this: 10 percent of total assets should come from investing other institutional investors’ money in the next five years.

The target was set independently of a plan currently underway by parent company Allianz to move Allianz Real Estate from its investment management platform, where it sits currently, to its asset management business, where it can be combined with the property business of asset manager PIMCO. That would bring the total assets to €100 billion in one fell swoop. That tie-up, announced in March, could take as long as a year to complete.

In the meantime, Allianz Real Estate has been going about racking up the third-party collaborations. Last week, a third venture was announced, with Korea’s National Pension Service, which will see as much as €2.3 billion in equity committed by the two investors, deployed into core properties across Asia. It is the first such operation in the region for Allianz, and follows the acquisition of the EDGE East Side Berlin office development on behalf of German pension fund Bayerische Versorgungskammer at the end of 2019 in Europe. That followed the first initiative launched earlier in the year – a Luxembourg-based European debt fund called PAREC.

The venture with NPS has given rise to a fund called Allianz Real Estate Asia-Pacific Core I, though NPS will be the only investor. Rush Desai, Allianz Real Estate’s chief executive officer of Asia-Pacific, told PERE that both Allianz and NPS could further “explore or scale up this partnership to a global level” as both investors have “very similar investment objectives.”

“If you think about the evolution of our business in the region, we have systematically built our capabilities and infrastructure over time. We started by investing in funds, side cars, joint ventures and then direct investments,” said Desai, who has been overseeing the Asian chapter of Allianz Real Estate’s growth plans since joining in 2016.

The asset base in the region has grown 83 percent year on year to €5.5 billion as of December 31, reflecting about 7 percent of the total assets. In Trausch’s 2016 PERE interview, he said the target was to get the Asian holdings from 1.5 percent then to 5 percent this year, so this marks yet another target beaten.

As such, the NPS joint venture has added further momentum to Allianz’s general growth plans, its Asian expansion effort and its third-party management ambitions.

Timeline

2016 Francois Trausch and Rush Desai join the firm as global CEO and Asia CEO respectively. The firm has an AUM of €45 billion.

2018 Launches first debt fund PAREC to raise capital from German institutions

2019 August Makes first equity investment on behalf of third-party capital via joint venture with Bayerische Versorgungskammer to back developer EDGE Technologies

2019 December The firm reached an AUM of €75 billion

2020 March Allianz Real Estate to combine with Pimco

2020 May Secures €300 million from BVK, the firm’s first third-party investor for its European debt fund

2020 July Forms $2.3 billion equity fund with NPS where Allianz RE acts as both the general manager and an investor