Olivier Piani, Allianz Real Estate

Allianz Real Estate is one of the world's leading property investment and asset managers. It aims in the development and management of a globally diversified and centrally managed real estate portfolio on behalf of the Allianz investors. Real Estate Publishers recently caught up with Olivier Piani, the company’s CEO, and asked him about Allianz Real Estate’s current and future projects.

Can you tell us a few things about yourself and the company?

“I joined Allianz four years ago and before that I worked for 10 years with GE Real Estate as head of its business in Europe. Before that I was working in the finance sector for Paribas Group in Paris, New York and London. I discovered real estate with the crisis in the early 90s and I have been involved in this sector ever since, having acquired 25 years of experience in the real estate environment.

“I joined Allianz with two goals – one was to help the company grow its exposure to real estate and the second was to build a real estate practice. Before I joined they just had some real estate departments in different insurance companies all around the world, without a common platform. Real estate practice means building a global investment and asset management company around the world, captive to the Allianz group of companies, investing and managing assets in real estate.”

What is the size of the real estate arm of Allianz and which markets are you active in?

“We have €20 billion of assets around the world and there is also a loan book to real estate which probably amounts today to €6 billion. So the total exposure to real estate today is €26 billion.

“As we are mainly a Europe-based group of insurance companies, established in Germany, France, Italy, Switzerland and other European countries, most of our assets today are in Europe. On the equity side, over 90% of our assets are in Europe. On the loan side it’s the opposite, because most of our loan operations are done in the US. Five out of six of the loan activities are done in the US and not in Europe.”

What about the type of assets you have?

“Most of the assets we have today are offices with an overall exposure of approximately 60-65% and the second biggest exposure is residential, typically European companies with residential exposure both in Germany and in France. We also have a big residential exposure in Switzerland, which even exceeds the one in Germany, but this is not an inheritance of the past, it’s a conscious asset management decision today. So, overall the residential sector is over 20% and then you have the balance, which is retail and logistics and other type of assets which account for the other 20%.”

Where will your growth be directed in the coming years?

“We will continue our growth in three angles. One angle is to increase our presence outside Europe; today 90% of our assets are in the Eurozone and we would like this to become 80% and have 20% outside the Eurozone, so proportionally we will grow more outside the Europe than in Europe, and mainly I am referring to the US and/or Asia.

“In terms of our target asset classes, we would like to increase our retail exposure, which is probably less than 10% today, to 20% within three to five years. Thirdly, in terms of the way we do our business, we aim to increase the proportion of partners or funds in which we do business.”

Has the crisis been an opportunity for you?

“It has been an opportunity in a strange way, because it has made institutional investors take their money out of bonds and stocks and therefore they had to put them into something else, with the most obvious alternative being real estate. If you look at the last four years, over the crisis, real estate as an asset class has been performing reasonably well, with much less volatility than stocks and bonds. Today there is another side to this, which is lending to real estate, which is appearing as an asset class that could have the same level of return for investors.”

What about your partners? Do you manage third party funds and how difficult is it to find the right funds to invest in?

“All the investments I have talked about are 100% Alliance insurance companies’ funds, because for the moment we are building up the exposure of Alliance itself to real estate. Once we are finished and hopefully we reach our target which is set at €30 billion, maybe we can think about investing in third party funds.

“There are a lot of funds out there and we need to find the right people, people who are good in investing and managing, but also people who have a similar vision and strategy to the ones that we have. We are long-term investors into real estate and so we want our partners and funds to have a similar view on long-term investment.

“Our main strategy today is core to core-plus, but we would also look at funds that are active in sectors that could bring added value to our business. These are mainly activities that we don’t do ourselves, because we don’t have the appropriate teams, for example right now we are investing into an opportunistic fund that covers Asia.”

What is the message you would like to send to our readers?

“The heart of the message is that real estate today is a very interesting asset class. It fits very well to institutional investors, like insurance companies. In Allianz Real Estate we are doing this in an organized fashion and we have the time and the right infrastructure to be successful in this sector. By the end of this year we will have invested and/or committed €4 billion of assets in new deals. This is a significant amount in today’s world.”

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