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AMERICAS NEWS: Italian migration

Over its 185-year history, Italian insurer Generali Group has amassed a vast €27 billion real estate portfolio, predominantly in continental Europe. More recently, however, the company has been making a significant push outside of the region in an effort to diversify its property holdings, first in Asia and now, the world’s largest real estate market, the US.

Generali Real Estate, the insurer’s property arm, currently has a presence in 13 markets across Europe, Asia and the US, but the US is the only one of those markets where it does not have a physical presence. Rather, Tina Paillet, head of North America and UK at Generali Real Estate, is based at the company’s London offices and travels across the pond multiple times a year.
“The USA is, I would say, a new market for us, where we’re very new entrants,” said Paillet, speaking at the RICS Tri-State International Investment Panel 2016 in New York last month.

Generali first began investing in the US six years ago, but its exposure in the market to date has remained limited. The company currently holds approximately €500 million, or approximately 2 percent of its total property portfolio, across six office and retail assets in the US.

“What we’d like to do is build our presence in the US and hold long term,” said Paillet. She said Generali would focus on well-located properties in major gateway cities in the US. She added that the insurer did not have a specific deployment target in US mind but instead would remain “pragmatic” and invest either via direct acquisitions, joint venture partners or third-party managed funds.

Generali, however, is aware of the challenges in ramping up in US real estate at the current time. In its most recent Market Perspective report in January, the company observed: “Some questions arise about the pricing level achieved so far in London, New York or California for prime assets, highlighting the need for greater selectivity. The primary driver of the shift in sentiment was coming from the prospects for higher interest rates ahead, coupled with softer rental growth expectations compared to last quarters.”