German insurance giant Allianz said that its plan to merge its subsidiaries PIMCO and Allianz Real Estate is to create a true global leader in real estate management across Europe, the USA and Asia-Pacific in core, value-added and opportunistic real estate. The new entity will have over €100bn in assets under management.
In practical terms, the merger will see wholly-owned Munich-based Allianz Real Estate, with €70bn in AUM, being transferred to the US-based fixed income investment manager PIMCO and hence becoming part of the asset management division of Allianz SE. Allianz said the two organisations were complementary, with PIMCO’s opportunistic investments and credit in the US and Europe and Allianz Real Estate’s expertise in direct and indirect investments in core and value-add assets across Europe, Asia Pacific and the US.
Essentially, the merger represents a big bet by Allianz that Allianz Real Estate’s scale and network of specialist partners combined with PIMCO’s top down investment framework and third-party expertise will create one of the largest real estate investment managers in the years to come. And will benefit from the profit synergies that should follow.
There are still a few steps to be overcome in the merger gaining full approval, including the involvement of employee representatives in continental Europe. Allianz Real Estate has 440 employees. Nonetheless, the deal is absolutely expected to go ahead.
Francois Trausch, CEO and CIO of Allianz real estate, issued a bullish statement on the merger: “When we match the Allianz Real Estate global footprint and the Allianz appetite for real estate with the unparalleled access to the PIMCO intellect, research, analytics, focus on performance, and of course global distribution capabilities, we are destined to become one of the world’s most well rounded real estate specialists and Alternatives experts.”
PIMCO’s CEO Emmanuel Roman said: “Real estate has been, and will continue to be, central to the development of our Private Strategies platform, which we consider essential to providing our clients with alternative approaches to achieving their long-term investment objectives. By incorporating Allianz Real Estate into PIMCO’s existing suite of private solutions, we intend to significantly enhance our capabilities in an area that has become a critical component of our clients’ portfolios.”
Last month Allianz Real Estate reported that its AUM grew 16% year-on-year to €73.6bn in 2019. About €53bn of this was in direct real estate investments, with the rest in the form of debt financing. It grew its Asian business 83% year-on-year to €5.5bn, with deals like the US$1.2bn acquisition of a core multi-family portfolio in Japan and its purchase of a 60% stake in the US$1.17bn DUO Tower in Singapore. “2019 was a pivotal year both in terms of our AUM growth as well as organization build-out in the region,” said Rushabh Desai, CEO Asia-Pacific for Allianz Real Estate.
