ALLIANZ REAL ESTATE REAL ESTATE INVESTMENTS FROM A GLOBAL INVESTOR S PERSPECTIVE Investors Forum 2018 Alexander Gebauer CEO Western Europe Brussels, January 18 th 2018 Vertigo, Luxembourg
AGENDA 01 at a glance 02 Investment approach 03 Preferred markets 2
at a glance WHERE WE WORK Top 10 17 investment destinations 1 United States Germany France Switzerland United Kingdom & Ireland Italy Netherlands Austria Asia Pacific Spain Atlanta Berlin Bern Brussels Frankfurt Geneva Hamburg Lausanne Los Angeles offices Madrid Milan Munich New York Paris Singapore Stuttgart Zurich Headquartered in Munich and Paris, our operational management is delivered through local offices in Germany, France, Italy, Spain, Switzerland, Belgium, the U.S. and Singapore Our team of 450 dedicated real estate experts share best practices globally and employ local market expertise to deliver stable, risk-adjusted returns to our investors and develop effective partnerships around the world 1 ) standing portfolio (debt and equity) 3
Source: June 2017 at a glance OUR KEY FIGURES nd largest investor in real estate (whole Allianz Group) 53bn of assets under management 4.2 mn sqm of lettable space (direct equity portfolio) 450 employees 37bn of investments in equity 16bn of debt investments occupancy rate (since 2014) 95% > 1bn rental income p.a. (directly held portfolio) Source: June 2017 4
Source: June 2017 at a glance OUR AUMS The case for Alternative Investments tremendous growth in AUMs largest RE players globally Allianz investment universe Total equity in EUR bn Global TOP RE investors 1 Total EUR 689bn 6% 8% Alternative equity Alternative debt Due to the current low-interest environment accompanied by the relative unattractiveness of bonds, Allianz is looking for asset classes with a more appealing riskreturn profile Thanks to an increased capital efficiency, Allianz is able to increase its investments in alternatives (18% y-o-y growth) with stable cash flows and thus fit very well from the liabilities side drives a European Debt US Debt Equity 28,2 5 22 1 43,7 4 9 31 50,0 5 10 52,9 9 10 35 37 2012 2015 2016 Q3 2017 ARE s AUMs roughly represent 50% of Allianz alternative assets Mid-term equity target of EUR 50bn, equal to a 35% increase making us one of the ADIA Allianz APG 42 CPPIB CDPQ 34 31 Global TOP RE investment managers 2 Brookfield PGIM 110 TH Real Estate 93 Blackstone 91 Hines 87 52 #17 50 57 153 Source: June 2017; 1) IPE 2017, in EUR bn as of 31.12.2016; RE equity & debt; 2) IPE 2017, in EUR bn as of 30.06.2017; RE equity & debt 5
Source: June 2017 Investment approach BUY-MANAGE-SELL APPROACH where demographics are strong and markets that are deemed to be the winners of the future where supply is constrained (physical, planning etc.) Sell Buy where markets are liquid in the large-scale segment (EUR 100mn +) -> focus on gateway cities where capital is scarce or complexity matters and Allianz can capitalize its strong balance sheets, allowing us to do 100% equity deals (no need to secure financing) Buy when special situations arise (opportunity-driven) Manage Manage Sell reposition assets when our 90 asset managers see (re-)development opportunities Find strong partners, both on the operations side (ca. 40 partners) as well as on the tenant side to maintain a 95%+ occupancy rate across our portfolio assets that lost their strategic fit and no longer match with our clients strategy smaller assets to generate economies of scale on the asset management side Our ultimate goal is to achieve a portfolio with a modest risk profile and the highest possible returns for our clients, therefore we diversify our portfolio across regions and asset classes 6
Source: June 2017 Investment approach DIVERSIFICATION BY GEOGRAPHY AND LOCATION Asset allocation by regions Equity only Asset allocation by classes Equity only 13% Americas 82% Europe 2016 2% Others 3% APAC 2016 Mid-term 51% Office 40-50% 20% Retail 20-30% 19% Residential 10% 4% Industrial 10% 6% Other 10% Source: June 2017 7
Source: June 2017 Investment approach DEFINING A REAL ESTATE INVESTMENT STRATEGY THE FOUR WS 1.) What? 2.) Where? 3.) Which? 4.) When & How? Sectors Regions Styles Tactical Products Investor objectives & constraints Investment approach Characteristics/ drivers/ investment principles for 7 asset classes Strategic assessment of 48 countries 2 investment styles: core value-driven Overarching investment themes Tactical positioning alongside the market cycle (more than 200 city/ sector assessments), direct/ indirect investment in a market Existing portfolio New portfolio 8
Source: June 2017 Investment approach TOP DOWN DRIVEN ASSET ALLOCATION ON A REGIONAL LEVEL AAA office scoring Structural component Tacticalcomponent City Total score 100% Global status and market maturity Size of the real estate market Demographics & human capital Economic strength Tenant concentration, rent volatility & supply constraints + Occupier market: cyclical position and trend change Occupier market: outlook Investment market: cyclical position and trend change = Berlin Paris Frankfurt Amsterdam Barcelona Munich Madrid Copenhagen Stockholm Vienna Milan Oslo Dublin Brussels Prague Manchester Dusseldorf Cologne Edinburgh Stuttgart Hamburg Marseille Birmingham Helsinki Lisbon Rotterdam Budapest London Luxembourg Warsaw Lyon Glasgow Lille Rome 0,272 0,268 0,246 0,237 0,231 0,228 0,152 0,145 0,125 0,116 0,104 0,098 0,097 0,091 0,085 0,049 0,034 0,014-0,040-0,096-0,104-0,108-0,119-0,124-0,128-0,131-0,137-0,138-0,163-0,169-0,204-0,218-0,258-0,269 theoretical framework Constantly combined with the view of the transaction teams in the local market and challenged by our Investment Committee Source: Research 9
rce: June 2017 Investment approach OUR VIEW ON BRUSSELS ARE s AAA office scoring Brussels vs EU-34 city average Investment market cyclical position Occupier market outlook Occupier market cyclical position 34 city average Brussels Global status and market maturity 1,00 0,00-1,00 Occupier market longterm resilience Size of office market Economic strength Scoring from 1 (best) to -1 (worst) Structural score Tactical score Demographics & Human capital Qualitative assessment + - Stability of the market Low vacancy rate (below 5%) in the city center (but double-digit in the fringe) Low supply (completions in the past were mainly refurbishments and only few developments) Dependency on Europeanunion and its entities Illiquidity compared to other European cities Strict rules for foreign direct investments Stock quality Preferred submarkets Stagnatingprime rents (in 2017 first uplift in 5 years) Brussels: CBD, North district, Louise and Leopold Source: PMA, Research 10
Source: June 2017 Preferred markets EXPANSION FOCUS Geographies APAC USA Acquisition of prime office, retail, logistic, residential property in established markets. Investment in direct properties in the core and core+ categories in excess of EUR 50mn or more Classes Joint ventures and fund investments with other market leaders in specific asset classes requiring operating knowhow (e.g. logistics and student housing), new markets (e.g India and Canada) and higher risk strategies (e.g. value-add or opportunistic) Logistics Alternatives 11
1515 Broadway: New York, USA (Joint Venture) Preferred markets RECENT ACQUISITIONS OF PRIME PROPERTIES IN KEY MARKETS ACROSS THREE CONTINENTS 1515 Broadway: New York, USA (Joint Venture) The Icon: Vienna, Austria (Direct Investment) Vertigo: Luxembourg (Direct Investment) Trinity Tower: Shanghai, China (Co-investment) Kapwest: Munich, Germany (Direct Investment) Eni Head Quarter: Milan, Italy (Direct Investment) Source: 12
DISCLAIMER Assessments are, as always, subject to the disclaimer provided below. Forward-looking statements The statements contained herein may include prospects, statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such forwardlooking statements. Such deviations may arise due to, without limitation, (i) changes of the general economic conditions and competitive situation, particularly in the Allianz Group's core business and core markets, (ii) performance of financial markets (particularly market volatility, liquidity and credit events) (iii) frequency and severity of insured loss events, including from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions, including related integration issues, and reorganization measures, and (xi) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. No duty to update The company assumes no obligation to update any information or forward-looking statement contained herein, save for any information required to be disclosed by law.