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Allianz's Shrinking $63B Property Portfolio Becomes Less German

  • Office property allocation also reduced
  • Shift underscores weakness in German and US real estate
  • Fourth-quarter profit nearly doubles

FRANKFURT, Feb 23 (Reuters) - Allianz's 58.4 billion euro ($63.21 billion) real estate portfolio is shrinking, becoming less devoted to offices and less German, underscoring troubles in the commercial property sector and the insurer's home market.

The value of Allianz's real estate portfolio fell by 6.2% in 2023 from 62.3 billion euros a year earlier, figures showed on Friday, as the German insurer revalued some holdings and sold others.

Allianz, one of Europe's largest investors, faces portfolio pressure in both its home market and the United States as prices and demand for commercial real estate decline sharply.

Investors are closely watching to what extent financial institutions, funds and other property owners are revising the values of their holdings or selling as the market declines.

The share of Allianz's portfolio allocated to office buildings fell to 49% from 52% over the course of last year, dropping below 50% for the first time in at least a decade, company presentations show. In 2013 it stood at 62%.

At the same time, its portfolio allocation to Germany - which is going through its most severe real estate crisis in decades - edged down to 17%, compared with 18% in 2022 and 29% in 2013.

Its allocation to the United States also dropped slightly.

Finance chief Claire-Marie Coste-Lepoutre said Allianz was invested in real estate for the long term, adding that its holdings were high quality and that it would consider acquisitions.

Details on Allianz's property portfolio were released in the company's fourth-quarter earnings report, which revealed a near doubling of net profit from a year earlier.

The company said that quarterly performance was helped by its life and health insurance business, especially in the United States and Italy.

Net profit attributable to shareholders rose to 2.151 billion euros from 1.104 billion but was just short of a 2.186 billion euro consensus forecast.

A strong fourth quarter helped the company to lift full-year net profit by 33% to 8.541 billion euros.

Allianz posted a 2023 operating profit of 14.746 billion euros and said it was targeting between 13.8 billion and 15.8 billion euros this year.

($1 = 0.9239 euros)

Reporting by Tom Sims and Alexander Huebner Editing by Shri Navaratnam, Jason Neely and David Goodman

Source: Reuters

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