Allianz Real Estate has provided a €466 million loan to a consortium of borrowers represented by a Belgian property investor for the refinancing of a prime retail portfolio in France and Belgium, marking the largest European debt deal for the manager in 2021, Real Estate Capital Europe can reveal.
The German insurance company subsidiary provided the loan on a 10-year term, on behalf of several of its group insurance companies. The underlying property portfolio consists of 12 long-let prime retail assets: seven in Paris, three in the Provence-Alpes-Côte d’Azur region of France and two in Brussels’ uptown retail area. It includes assets in upmarket locations including Avenue de La Toison d’Or in Brussels, Avenue Montaigne in Paris and Boulevard de la Croisette in Cannes.
Speaking to REC Europe, Roland Fuchs, Allianz Real Estate’s head of European real estate finance, said the transaction reflected the company’s approach to real estate lending.
“We finance what we like to own – this is the philosophy of our debt business,” said Fuchs. “Our mandate by nature and by structure has been designed to concentrate on high-quality assets in prime locations, and there is very strong consistency in what we do.”
“[We look at things like] how the assets were preserved; were they very resilient?” said Fuchs. “We have made our underwriting under the assumption of what is happening in the buildings right now, [regarding] what may happen in the future.”
Fuchs added that cross-collateralisation over the entire portfolio also helped Allianz to get comfortable with underwriting the transaction.
Although many lenders remain wary of retail real estate, Fuchs argued that stock of the right quality in the right location has a strong future.
“Retail, in a nutshell, is about experience, and we believe that the assets that we finance tick all the right boxes – we need to be comfortable with location and customer footfall, which will always be there, you will always have people on the streets of Paris,” said Fuchs.
While e-commerce is a growing trend, Fuchs is confident in physical retail will weather the pandemic. “People like interactivity; communication; and to see, understand and touch the products,” he said. “This concept only functions if you have a location where people like to go to meet. This is not about luxury retail. This is about prime retail in the sense that it takes the customer’s desire to [enjoy the experience] of shopping. That’s what retail is about, which is even more true for inner-city retail in absolutely prime locations, like in Munich, Paris or London.”
Allianz Real Estate has grown its European debt platform in 2021, with assets under management at the end of September standing at €10.9 billion, up 16 percent year-on-year. The pan-European financing business is active in 12 countries, diversified across the office, logistics, residential and retail sectors.