Allianz to grow loan book through Central European business

Allianz Real Estate seeks to execute €2 billion of new debt investments.

Allianz Real Estate has Central Europe on its lending radar, as it aims to write €2 billion of European real estate loans this year.

“Our next step in mind is to provide debt in Central Europe, particularly in Austria, the Czech Republic and Poland, mainly in offices or logistics,” Roland Fuchs, the head of European debt, told Real Estate Capital at EXPO Real in Munich.

“We want to grow all over Europe, to reach €2 billion of new debt investments, and we are confident to reach the target this year, having already reached our initial 2017 plan of €1.5 billion,” he added.

“We are building up our presence in the UK, first through debt – which is the right instrument to enter the market at this point in time” – Roland Fuchs

The insurer currently has a total European loan portfolio of €5.9 billion. Allianz started lending in Germany in 2011, focusing then on France, where it has recently provided a €300 million 10-year senior loan to finance ‘Window’, a prime office building in the La Défense business district of Paris.

Since 2013, the insurer has already lent in more than 10 European countries, including the Netherlands, Sweden and Ireland. In the latter, the firm provided a €290 million loan to finance BVK’s Liffey Valley mall near Dublin in June.

Earlier this month, Allianz participated in a £212 million (€235 million) majority stake in the senior debt financing of 55 Baker Street in London. The long-term financing was the insurer’s second landmark transaction in the UK, having co-financed the CityPoint Tower earlier this year.

The participation in the CityPoint deal plus the 55 Baker Street transaction brought Allianz’s UK debt exposure to around £500 million, as the insurer targets more exposure to the country.

“We are building up our presence in the UK, first through debt – which is the right instrument to enter the market at this point in time. With a debt investment, you have a risk buffer if you don’t go into the 70 or 80 percent loan-to-value space,” Fuchs said.

“We are using the same strategy in Spain – we have provided about €500 million of debt, and now we are looking into the equity side. We are long-term investors, so we are not that concerned about short-term volatility; for instance prompted by the Catalan crisis,” he added.

In the Netherlands, Allianz completed a large transaction recently – financing an office portfolio in a deal worth more than €200 million. “We have also increased exposure in the Netherlands in residential developments through equity,” said Fuchs.

At EXPO, Allianz highlighted the use of drones for due diligence of properties around the world, through its partnership with start-up FairFleet.

“Our core business uses drone technology for façade inspections, while providing an overview of the asset quality, location and surroundings,” said FairFleet co-founder Alexander Kostitsyn.

“With drones, data collection for inspections is 90 percent faster and 95 percent cheaper than with the traditional method,” he added.

The use of this type of technology has a cost-saving impact when assessing assets located in foreign countries, Kostitsyn explained, which could benefit those property investors and lenders pushing to diversify their portfolio geographically.