Allianz Real Estate has increased its global logistics portfolio to €11.6 billion in assets under management as at the end of 2021, up 32% year-on-year.
The firm’s logistics exposure comprises €8.6 billion in equity investment, an increase of 39% year-on-year, and €3 billion in financing, up 15%. Regionally, the firm’s portfolio split is €5.8 billion in Europe, €3.3 billion in the U.S. and €2.5 in Asia Pacific.
Kari Pitkin, Head of Business Development Europe at Allianz Real Estate said: “We established our global logistics portfolio early, and now have a leading market position in the sector. Our dedicated logistics team has continued to build on this in 2021, leveraging their strong relationships with prime partners in Europe and beyond to capitalize on the significant shift in distribution and the evolution of the retail industry.
“Our approach to the sector has fully aligned with our global ESG strategy and the wider theme of sustainability. We have continued to select assets and partners with strong ESG profiles, building a logistics portfolio which meets the very highest standards.”
In April 2021, Allianz Real Estate announced one of the most significant ESG programs in the real estate industry, with an aim to reduce the carbon footprint of its global portfolio by 25% by 2025 and net zero by 2050.
The firm therefore intensified its decarbonization efforts over 2021, engaging with tenants to obtain energy consumption data and working closely with developers to ensure all assets contribute to the transition towards a low-carbon economy. Initiatives include the incorporation of energy efficient improvements such as solar panels and the provision of e-truck charging infrastructure.
In March, for instance, the firm acquired a €72 million newly built, last-mile logistics facility single-tenanted by Amazon in the south of Vienna. The first part of an active asset management program focused on sustainability is the installation of photovoltaic panels as a means to increase the amount of energy derived from renewable sources.
During the year, Allianz Real Estate completed several high-profile transactions. In 2021, the firm grew its Italian logistics portfolio to more than €500 million across 16 facilities, underscoring the region as a core growth market. Highlights included the acquisition of two logistics assets currently tenanted to a prime Italian tenant in Northern Italy.
In September, €280 million in debt funding was provided to BentallGreenOak to support the development of a build-to-core portfolio of eight prime logistics assets in the UK – with the financing meeting the criteria to be classed as a green loan.
In December, Allianz and logistics specialist VGP agreed to form a new 50/50 joint venture, the fourth such venture between the two since 2016. It will develop a portfolio of 90 prime logistics assets in around 25 strategic locations in Germany, the Czech Republic, Hungary and Slovakia over a five-year period, with around 70% to be built in Germany.
Most recently, the firm announced the completion of a €290 million develop-to-core logistics vehicle focused on Grade A speculative assets in the UK in partnership with sector specialist AEW. The forward acquisition of Frontier Park, a 760,000 sq ft logistics facility, marked the fourth acquisition for the venture since the partnership was announced in 2019.
Allianz Real Estate to expand its logistics portfolio in 2022
Allianz Real Estate expects to further expand its logistics portfolio in 2022, ramping up its activity in Europe, the U.S. and in the fast-growing Asia-Pacific region, all of which are benefitting from strong tailwinds engendered by its significant adoption of e-commerce.
Karen Horstmann, Head of Acquisitions United States at Allianz Real Estate added: “Our focus is on the development of state-of-the-art facilities through both equity partnerships with leading operators and debt financing, honing in on prime, sustainable assets located strategically in and around urban areas – not only in Europe which has seen a plethora of activity over 2021, but in the U.S. as well, which currently serves as the world’s most-developed logistics market. Tenants leased more than one billion sq ft of U.S. space in 2021 alone, almost half of which is net absorption – the highest level in at least three decades, despite net asking rents also being at an all-time high. With compelling fundamentals reshaping the commercial sector, we look forward to further expanding our portfolio in the region and beyond as we head into 2022.”
The acceleration of e-commerce, a structural trend that gained momentum as a result of the pandemic, is expected to remain for the long-term.
Danny Phuan, Head of Acquisitions Asia-Pacific at Allianz Real Estate concluded: “The logistics sector has come out of the Covid-19 recession stronger than ever. The pandemic has given momentum to e-commerce adoption, with global e-commerce sales rising to EUR 2.1 trillion as at the end of 2020 – marking a 140% increase in just five years. Outperforming all other sectors over a five-year period, the sector is expected to remain resilient in 2022 due to robust, persistent trends, including increased consumer delivery demand as well as supply chain re-configuration.”
“With dense cities having scarce available land, an innovative approach to logistics will be required as we navigate 2022 and beyond. If the demand for last-mile facilities and land values remains high enough, we think multi-story warehousing may become more popular, as will mixed-use buildings with logistics included. We are well positioned to lead the sector in the development of these new assets.”