Allianz‘s (ALVG.DE) substantial 58.4 billion euro ($63.21 billion) real estate portfolio is dwindling, showing reduced emphasis on offices and decreased German holdings, highlighting challenges in the commercial property sector and the insurer’s domestic market.
Figures released on Friday indicate that the value of Allianz’s real estate portfolio dropped by 6.2% in 2023 from 62.3 billion euros a year earlier, as the German insurer reassessed some investments and divested others.
Allianz, a major European investor, confronts pressure on its portfolio both domestically and in the United States, amidst significant declines in commercial real estate prices and demand.
Observers are closely monitoring how financial institutions, funds, and other property owners adjust the values of their assets or engage in sales amidst the market downturn.
According to company presentations, the proportion of Allianz’s portfolio dedicated to office buildings decreased to 49% from 52% over the past year, falling below 50% for the first time in at least ten years.
In 2013, it was at 62%. Concurrently, its allocation to Germany – currently grappling with its most severe real estate crisis in decades – marginally decreased to 17%, compared with 18% in 2022 and 29% in 2013.
The allocation to the United States also saw a slight decline.
Allianz’s Chief Financial Officer, Claire-Marie Coste-Lepoutre, affirmed the insurer’s long-term commitment to real estate investment, noting the high quality of its holdings and expressing openness to acquisitions.
Details regarding Allianz’s property portfolio were disclosed in the company’s fourth-quarter earnings report, which unveiled a nearly doubled net profit compared to the previous year.
The surge in quarterly performance was attributed to the success of its life and health insurance business, particularly in the United States and Italy.
While net profit attributable to shareholders increased to 2.151 billion euros from 1.104 billion, it narrowly missed the consensus forecast of 2.186 billion euros.
A robust fourth quarter contributed to a 33% rise in full-year net profit to 8.541 billion euros.
Allianz reported a 2023 operating profit of 14.746 billion euros and set a target of between 13.8 billion and 15.8 billion euros for the current year.