Allianz Real Estate of America, based in New York, is responsible for executing portfolio strategies in the Americas on behalf of a number of Allianz Group insurers. The closing on the first assets occurred July 6th.
The two investors have initially contributed three unencumbered properties to the joint venture that have a combined gross asset value of $1.26 billion. Columbia contributed two of its properties in the San Francisco Bay area. These include University Circle, a 451,000-square-foot office complex in Palo Alto valued at $540 million, which Columbia acquired in 2005, and 333 Market Street, a 657,000-square-foot office tower in the Financial District valued at $500 million, which Columbia acquired in 2012. Allianz now owns a 22.5% interest in University Circle and 333 Market Street, while Columbia owns 77.5% and will continue to oversee property management and leasing at these two properties, as well as management of day-to-day operations of the joint venture. Columbia was advised by Holliday Fenoglio Fowler, L.P. (HFF) and J.P. Morgan Securities LLC on the transaction.
Within the next twelve months, Allianz will increase its ownership interest in both University Circle and 333 Market Street to 45%, thereby adjusting Columbia's ownership percentage in these two properties to 55% and self-funding the venture for Columbia.
Allianz contributed 114 Fifth Avenue to the joint venture. This property is a 352,000-square-foot office building in Manhattan valued at $220 million which Allianz has owned since 2015 along with its partner, L&L Holding Company. Fully-leased to a strong roster of tenants, this landmark office asset is located in the vibrant Flatiron District of Midtown South and offers attractive historic architecture, tall ceilings and large floorplates throughout the building. The 19-story tower provides sweeping cityscape views and has few approaching capital needs, following a recent $45 million investment in infrastructure and contemporary renovations. At 114 Fifth Avenue, Columbia and Allianz each own 49.5%, while L&L retains its general partnership stake and will continue as the property management and leasing agent for this Midtown South building. Allianz was advised by Cushman & Wakefield of New York, NY on 114 Fifth Avenue.
"Our investment in this joint venture achieved our immediate goal of acquiring premier office assets in core locations on the West Coast," said Christoph Donner, chief executive officer of Allianz Real Estate of America. "Over the long-term, the opportunity to further diversify and expand our national geographic exposure in the U.S. office sector, and to form a strategic partnership with Columbia Property Trust is a win-win situation. It is rare to find an investment partner of their caliber with objectives so closely aligned with ours."
"This joint venture provides the ideal opportunity for us to partner with an exceptional, well-respected organization as we increase scale in our core markets," said Nelson Mills, president and chief executive officer of Columbia Property Trust. "We look forward to working with the Allianz team to pursue additional opportunities in line with our mutual investment objectives in select U.S. gateway markets."
Through the joint venture, Allianz and Columbia Property Trust intend to pursue additional core office assets in CBD locations.