Allianz Seeks to Expand US Office Portfolio; Bay Area is one Target

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Allianz Real Estate of America, Bay Area, San Francisco, Siicon Valley, Palo Alto

By Jon Peterson

Allianz Real Estate wants to grow its office portfolio in the United States and has earmarked the San Francisco Bay Area as one of its targeted markets.

“The San Francisco Bay Area is the home of innovation in many industries, and we would like to be part of that growth in the future. For us, we would like to find additional properties to buy in the region. This would be either in downtown San Francisco or on the Peninsula in Silicon Valley,” says Gary Phillips, a managing director and head of acquisitions for Allianz Real Estate of America.

The investor recently made its first entry into the market with a partial ownership of 333 Market Street in San Francisco and University Circle in Palo Alto. These assets are part of a joint venture with Columbia Property Trust, and the two properties are valued over $1 billion. San Francisco will be one of the targeted markets for the venture as it continues to buy additional assets going forward. The other markets being considered for future deals are Boston, New York, parts of Los Angeles and Washington, D.C.

Allianz plans for any assets bought for the venture going forward will have an ownership stake of 55 percent owned by Columbia and 45 percent by Allianz. The properties will only be core and core plus types of assets. “We look at core plus as those assets that have strong current income but might have some space that needs to be leased up or needs a modest renovation to bring the property up to market standards,” said Phillips.

There are a couple of reasons that led Allianz to set up the joint venture with Columbia in the manner it did. “We, as a foreign investor, are not allowed to own more than a 50 percent stake in direct property. We are not vertically integrated, so we rely on our partners to handle the day-to-day management of the assets,” said Phillips. On the deals going forward, both Allianz and Columbia will be searching the marketplace looking for transactions.

Allianz is looking to grow its global real estate portfolio significantly in the future. The investor has a global debt and equity real estate portfolio currently valued at €50 billion. Its long-range plan is to increase this to €75 billion over the next several years. Its activity in the United States will be a significant part of the growth. The current size of the real estate portfolio represents about 7.5 percent of the Allianz total global investment portfolio.

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