German pension fund BVK first third party investor in Allianz debt fund

Germany's largest public utility group Bayerische Versorgungskammer (BVK) is joining Allianz Real Estate’s €3bn Luxembourg-based European debt platform, investing €300 million euros for a 25% stake in a sub-fund with a total value of €1.2 billion, with the rest owned by Allianz insurance companies. 

Allianz Real Estate, which manages €8.7bn in European property debt, established the Luxembourg ‘umbrella fund’ in 2018 to open its strategy to third-party investors. At the end of 2019, the fund had close to €3bn in assets, and has become a core element of the firm’s overall European debt portfolio, which was valued at €8.7 bn at the end of 2019, up 10% year-on-year. The PAREC fund offers an attractive structure for Solvency I regulated pension funds such as BVK, as well as insurance investors regulated under the Solvency II regime.

Allianz said it said it expects BVK’s latest commitment “to accelerate demand from other large institutional clients, such as insurers and pension funds, to co-invest alongside Allianz in new sub-funds”.

The fund's strategy reflects the direction of Allianz Real Estate's European lending business: investments will focus on high quality real estate loans from first-class borrowers, with senior core/core+ loans in prime locations in European Category 1 locations. CEO Francois Trausch said last year that the company hoped to reach €100bn in assets under management by 2024, of which 10% would be managed for external clients. Since then, Allianz has announced that it will merge Allianz Real Estate with its third-party fixed income fund management business PIMCO.

Reinhold Weger, head of fixed income at the €81.7bn BVK, said its €300m investment in the Allianz sub-fund “represents an excellent opportunity to expand our exposure to quality assets through a co-investment structure”.

Allianz Real Estate has a long-standing relationship with BVK. In September last year, Allianz acquired an office building in Berlin from developer EDGE Technologies as part of a forward deal for a joint venture between Allianz Group insurance companies and Universal-Investment, acting on behalf of BVK. In 2018, the company provided BVK with a real estate loan of about €300 million to support the acquisition of a first-class mixed-use property in Paris.

Annette Kroeger, CEO of Allianz Real Estate North & Central Europe, said: ‘This is a milestone for our third-party business. We are delighted that our first third-party closing is with BVK, who are a like-minded investor and strong long-term partner, as this underlines our drive to both build expertise and strong relationships across the real estate business.’

Roland Fuchs, head of European Real Estate Finance for Allianz Real Estate, commented: ‘Closing our first third-party fund in today’s market is testament to the investment approach that we employ at Allianz Real Estate. Our pan-European origination presence and in-house loan asset management team has enabled us to stay close to our borrowers through 2020’s unprecedented months and to remain open for new prime lending opportunities.’

Despite the COVID-19 crisis, Allianz has remained an active lender over recent months, providing debt financing to GLL Real Estate Partners to buy a Class A office building at Bishop's Square in Dublin's business district.