Allianz Real Estate said this week that its global logistics portfolio has grown to €11.6 billion ($12.6 billion) as of the end of 2021 — a year-on-year increase of 32%.
During the year, the firm completed several high-profile transactions, including expanding its Italian logistics portfolio to more than €500 million across 16 facilities. Overall equity investment grew 39% and financing was up 15% last year. Regionally the portfolio is split between Europe (€5.8 billion), U.S. (€3.3 billion) and Asia Pacific (€2.5 billion).
“We established our global logistics portfolio early, and now have a leading market position in the sector,” said Kari Pitkin, head of business development Europe at Allianz Real Estate. “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 evolution of the retail industry.”
Highlights for the year 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 U.K. — with the financing meeting the criteria to be classed as a green loan.
ESG-oriented investments with a focus on decarbonization has been a wider theme for the firm. Last April for instance, Allianz announced its aim to reduce the carbon footprint of its global portfolio by 25% by 2025 and move to net zero by 2050.
By engaging with tenants, the firm worked last year to obtain energy consumption data and is now working closely with developers to ensure all assets contribute to the transition towards a low-carbon economy. Those actions include incorporating energy efficient improvements such as solar panels and the provision of e-truck charging infrastructure.
An example was the purchase last march of a last-mile logistics facility tenanted by Amazon just south of Vienna. Allianz focused on sustainability via the installation of photovoltaic panels as a means to increase the amount of renewable energy consumed.
Going into 2022, officials stressed that the logistics portfolio is still fueled by the e-commerce growth that forced the need for last-mile logistics during the pandemic. Activity is expected to ramp up in Europe, the U.S., and in the fast-growing Asia-Pacific region.
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. The JV 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 U.K. 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.
“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,” Karen Horstmann, head of acquisitions United States at Allianz Real Estate added.
In the U.S., tenants have leased more than one billion sq ft of U.S. space last year alone, she said. The growth story spans the globe, including Asia.
“With dense cities having scarce available land, an innovative approach to logistics will be required as we navigate 2022 and beyond,” added Danny Phuan, head of acquisitions Asia-Pacific. “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.”