Zurich Insurance, the Zurich-based insurer, is plotting a transactions program that would see its real estate assets grow by approximately $1 billion in 2016 as it bids to increase its exposure to the asset class.
As part of its plans, it is on the cusp of finalizing at least two separate account mandates, a €400 million European market mandate, and a $200 million Asian market mandate.
At this year’s MIPIM conference in Cannes, the Swiss insurer’s head of group real estate, Cornel Widmer, would not divulge details of the mandates, but he told PERE how, more broadly, the strategy for the year included targeting multifamily residential, retail and logistics assets.
He said he expected US and European markets to figure prominently in its transactional activity and, to a lesser extent, investments in developed markets in Asia would also form part of the strategy.
“We think the US is two years ahead of Europe. There, we will be very selective with our strategies and we will have a particular focus on 24-hour cities on the West and East Coasts,” Widmer said.
The target represents a slight decrease in real estate activity compared to 2015, when Zurich transacted around $1.8 billion of deals altogether, including a small amount of dispositions.
Zurich typically invests in real estate directly, sometimes via joint ventures and clubs. Its real estate division currently consists of approximately 70 staff working from eight offices.
Historically a core profile investor, Zurich aims to achieve superior risk adjusted investment returns relative to its liabilities. It does not deploy leverage.
Nonetheless, the firm has undertaken ‘outlier’ transactions as markets have become more competitive. It is currently in the throes of finalizing a club transaction in Italy, for instance, which does involve leverage. “This is an exception”, commented Widmer.