Allianz to lend €1.5bn this year with €5bn eyed by 2015

By James Wallace - Wednesday, February 06, 2013 15:00

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Allianz Real Estate, Europe’s largest insurance company, is seeking to lend €1.5bn in senior debt against German and French commercial property this year, as it seeks to build a €5bn loan book by the end of 2015.

Speaking this morning at the ULI Annual Conference in Paris, Olivier Piani, chief executive officer at Allianz Real Estate told delegates: “We would love to lend €1.5bn against European CRE this year, following on from the €1bn last year in five deals.”

Elaborating after the panel discussion on capital flows - and moderated by Internos founder Jos Short - Piani said the European insurer’s lending would likely fall somewhere between 50:50 and a two-thirds to one-third split with the bias in favour of Germany.

Allianz will continue to lend seven-year fixed-term loans at between 50% to 60% LTV, on core to core plus assets it would be willing to own directly, seeking margins between 200 to 250 basis points over three-month EURIBOR.

Piani said UK lending remains unlikely but possible as an exception to the rule, as part of a club deal or with a potential future jonint venture lending partner.

Allianz’s reluctance to lend against UK property is explained by current and the geography of its liabilities. Firstly, the slightly better risk-adjusted returns available in the UK, relative to prime Germany and France, is offset by the currency conversion between euros and sterling. 

Added to which, as a Continental European insurance company, all Allianz’s long-term liabilities are euro-denominated, therefore, there is no requirement.

While Piani declined to comment, CoStar News understands that Allianz Real Estate is to refinance one of the segregated pools of debt syphoned off by Gagfah, the German residential company majority-owned by Fortress, as part of its wider €2.08bn maturing CMBS loan this year.

Last year, Allianz looked at buying Société Générale’s legacy performing loan book, before decided the pool didnt not fit the seven-year maturity profile it was seeking, which paved the way for AXA Real Estate’s eventual acquisition of €800m of European loans.

Allianz set up its European real estate lending platform 18 months ago, but only started lending in earnest last year, closing five deals amounting to €1bn. The insurer’s first lending deal was the €300m financing of Deutsche Bank’s German headquarters.

This year’s targetted €1.5bn lending haul is expected to come in seven deals, as the insurer builds to the €5bn medium-term target by the end of 2015.

In the US, Allianz already has a €5bn CRE loan book, while in direct property the European insurance lender has ammassed a €30bn property portfolio which, net after disposals and capital recycling is expected to tick up to around €23bn by 2015, estimated Piani.

“We care more about overall debt and equity combined commercial real estate exposure than the individual weightings,” explained Piani, who earlier said on the panel that Allianz’s current €20bn direct property book reflects just 4% of the insurer’s aggregate €500bn balance sheet.

Piani told delegates that Allianz was comfortable building its direct property exposure from the €20bn to €30bn, which would reflect 6%. 

Seperately, in a subsidiary division of Allianz, the insurer is beginning to provide debt against infrastructure assets.

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