September saw the closing of the EUR 400 mln acquisition of Silesia City Center – the largest single asset acquisition in the CEE region this year. The Katowice shopping complex, with a leasable area of 85,000 sqm, was sold by Immofinanz to a consortium led by German investor Allianz Real Estate, which now has a 45 pct stake in the property. In the last twelve months the company has also closed its transaction to buy the Warsaw Financial Center (a EUR 210 mln deal in which it has an 87.5 pct interest), as well as its EUR 173 mln purchase of Platinium Business Park in the same city. Stefan Brendgen, the CEO of Allianz Real Estate Germany, spoke to us about these deals and the company’s future investment plans
Nathan North, ‘Eurobuild CEE’: Why did you regard Silesia City Center as such an attractive asset? After all, it is a shopping complex in what many people might think of as an unfashionable provincial city.
Stefan Brendgen, ARE Germany:
Silesia City Center is a complement to our Polish office acquisitions of last year: the Warsaw Financial Center and Platinium Business Park in Warsaw’s Mokotów district. For portfolio reasons we didn’t want all the assets to be offices or in Warsaw. Silesia City Center has an excellent reputation in an attractive market and has won various prizes. It was in everyway the right investment to do and we will continue to buy into big dominant centres across Europe.
Why didn’t you go for a shopping centre in Warsaw or Prague?
We would also have been interested in a big shopping centre in Warsaw, but have not yet found the right asset available that corresponds with our requirements.
How was the acquisition financed?
The information I have is that you partnered with a Chinese investor. Silesia City Center was an all-equity deal without any debt being taken on. Our two other investment partners were ECE (also the operating partner) and, yes, a Chinese sovereign wealth fund.
And can you tell me the identity of this fund? Will you be forming more consortiums with this or with similar investors in the future?
Unfortunately, due to confidentiality clauses, we can’t reveal its identity or say any more about it.
But you intend to invest under a similar format in the future?
Well, the JV approach is one that we like. Silesia City Center was acquired for more than EUR 400 mln, therefore by entering into a JV we were able to avoid putting all our eggs into one basket – or rather, our equity. This is a model we are going to follow in the future and have recently done so in France.
Could you give us some idea of the scale of the recent expansion of your property portfolio?
In 2009 Allianz’s worldwide real estate portfolio comprised EUR 16 bln of assets under management, but the figure has now grown to in excess of EUR 22 bln.
So which sectors are you now focusing on and why?
Historically our portfolio has been overweight in terms of offices, so going forward we are planning to increase the percentage of retail. Warsaw offices are getting rather expensive and we have to be careful where we put our money. When it comes to logistics investment, we always do this in the form of partnerships.
What is the scale of your current investment portfolio in Poland and the CEE region?
We have so far invested around EUR 800 mln in Poland and EUR 200 mln in Hungary, roughly equally divided between offices and retail.
Which countries are you planning to concentrate on?
Our focus for the CEE region is now going to be Poland, the Czech Republic and Hungary, but not the smaller and less institutional SEE markets. There is also a political risk with Hungary, but this is hard to quantify. At this point in time, though, there will be no new acquisitions by the end of the year.
But you are planning to increase your involvement in our part of the world?
In the next 15 months, depending on what opportunities arise, we expect to invest around EUR 100–200 mln
in the CEE region and this could go even as high as EUR 400 mln – it all depends on the right product becomingavailable. Out of our entire EUR 6.4 bln portfolio of Allianz Real Estate Germany – which is responsible for Germany, Austria, the CEE region and Scandinavia – EUR 800 mln of it is in the CEE region, so this is a 13 pct allocation. We have a strong interest in products in this region, especially considering the pricing and competition on two of our other main markets: Germany is getting more expensive and in Scandinavia opportunities are more limited because of the activity of domestic investors.
Allianz Group: facts and figures
Set up in Berlin in 1890 as an insurance company.
In 2010 it was the world’s 12th largest financial services group and the 23rd largest company, according to ‘Forbes’.
At the end of September 2013, its market capitalisation was EUR 55.6 bln. Wholly-owned subsidiary Allianz Real Estate has head offices in Munich and Paris.
It plans to raise its real estate holdings from EUR 22 bln to EUR 30 bln over the next few years, increasing the share of properties in the group’s portfolio from 4 pct to 6 pct.
It has six international property investment subsidiaries. Allianz Real Estate Germany is the division responsible for investment in Germany, Austria, the CEE region, Scandinavia and the UK.
The chairman of the board
Stefan Brendgen is a member of the executive committee of Allianz Real Estate and CEO of Allianz Real Estate Germany. Born in 1964, he studied business management at the Universities of Bayreuth and Cologne and was awarded a scholarship by the DAAD German Academic Exchange Service. During his career, Stefan has been employed by Jones Lang LaSalle in international real estate services, as well being the managing director of DTZ Internationale Immobilienberatung and the managing director and head of
Germany of Tishman Speyer Properties Deutschland. In January 2009 he moved to Allianz as CEO of Allianz Real Estate Germany and a member of the Executive Committee of global Allianz Real Estate. He is married and has three children.
