Allianz and AEW have formed a new partnership to launch a new develop-to-core strategy focused on funding speculative developments within the U.K. logistics sector.
“With the favorable backdrop of limited availability and increasing tenant demand for larger-format warehouses, AEW and Allianz Real Estate have identified a clear opportunity to build a portfolio of core assets in the United Kingdom,” said Olivier Téran, CIO, Allianz Real Estate. “This new venture reflects Allianz’s focus on working with prime partners such as AEW and diversifying our portfolio with regards to the in-demand logistics sector.”
The venture, an Allianz-owned separate account vehicle managed by AEW, will focus on units of 200,000 square feet or larger in prime locations in the United Kingdom. The venture is being managed by Allianz Real Estate on behalf of Allianz group insurance companies, who have committed €290 million ($258 million) in total. AEW and Allianz Real Estate already have identified a number of potential opportunities with a primary focus on established core logistics locations throughout the United Kingdom.
One of the first investors in logistics, AEW created the LOGISTIS platform for continental Europe in 1999. Following a develop-to-core strategy, LOGISTIS has progressively scaled up its portfolio to build a prime platform with total value reaching €3.5 billion ($3.9 billion). This new mandate seeks to replicate the strategy in the United Kingdom, leveraging both AEW’s track record in logistics developments and current market dynamics.
Allianz Real Estate, the real estate investment and asset manager of the Allianz Group, has materially increased its exposure to the logistics sector over the past few years. Allianz considers logistics a key global trend and assesses through both direct and indirect investments. Logistics accounted for €5.6 billion ($6.3 billion) of the firm’s total assets under management as of Dec. 31, 2018.
In February, Allianz announced it had partnered with CBRE Global Investment Partners to acquire a Nordic logistics portfolio. In November 2018, the firm completed the acquisition of a logistics hub in northern Italy and completed two significant transactions in Asia: a 50 percent stake in a portfolio of core modern logistics assets in China and a partnership with ESR Group in India.
Nick Winsley, head of investments at AEW U.K. Investment Management, added, “The timing is right to launch this develop-to-core strategy. In a market where significant pools of capital continue to focus on a limited supply of investment stock or pre-let fundings, our strategy is to fund the development of larger buildings on a speculative basis.”
