Allianz, Columbia form US$1.3b US real estate venture

[NEW YORK] Allianz SE, Europe's biggest insurer, is partnering with Columbia Property Trust Inc. to create a US$1.26 billion joint venture for US real estate.

The Munich-based insurer contributed an office tower at 114 Fifth Ave in Manhattan that's valued at US$220 million to the partnership, Allianz's real estate unit said in a statement Thursday. Columbia added University Circle, a US$540 million office complex in Palo Alto, California, and 333 Market St, an office tower in San Francisco's financial district valued at US$500 million.

"Our investment in this joint venture achieved our immediate goal of acquiring premier office assets in core locations on the West Coast," Christoph Donner, chief executive officer of Allianz Real Estate of America, said in the statement. The partnership with Columbia "is a win-win situation. It is rare to find an investment partner of their caliber with objectives so closely aligned with ours." With low interest rates depleting investment income, insurers have increasingly turned to real estate ventures to boost investments in longer-term assets. MetLife Inc, the largest US life insurer, agreed in 2013 to link up with Norway's sovereign wealth fund to invest in US office properties. Allianz has clinched a deal last year to acquire a stake in a tower at 10 Hudson Yards on Manhattan's West Side.

The German insurer now owns a 22.5 per cent stake in University Circle and 333 Market St, and expects to double these stakes to 45 per cent in the next year, according to the statement. Allianz and Columbia expect to pursue more office acquisitions as part of the venture. Columbia, which has a portfolio of 16 operational properties in US cities, will hold 49.5 per cent of the 114 Fifth Avenue property, which equals Allianz's stake in that building. The insurer has owned the property since 2015 along with L&L Holding Co, which retained its 1 per cent stake.

Allianz Real Estate, headed by Francois Trausch, manages investments in the asset class on behalf of Allianz. It has about 50 billion euros (S$78.8 billion) in assets under management including direct as well as indirect investments and real estate loans. Allianz Real Estate of America manages US$14 billion.

Columbia was advised by Holliday Fenoglio Fowler LP and JP Morgan Securities LLC on the transaction and Allianz by Cushman & Wakefield.

BLOOMBERG