PIMCO Prime Real Estate, the core and core-plus real estate business of the asset management behemoth, is expecting to exit almost $500 million of assets in India and China as part of a portfolio rebalancing strategy in the region.

The Munich-headquartered investor is in the final throes of selling Waverock, a 2.4 million-square-foot office in Hyderabad, to Singaporean sovereign wealth fund GIC for about $258 million. The deal for the property, which counts Apple, Accenture and Tata among its tenants, is expected to receive government approval to conclude by the end of the year. The sale is by a joint venture between PIMCO and Indian real estate business Pallonji Group which originally acquired the asset four years ago.

PIMCO is also understood to have selected a preferred buyer for a logistics asset in China expected to be valued at approximately $200 million. While details of the Indian exit have been widely reported, the Chinese sale is at an earlier stage and the firm has declined to divulge information about it.

Nonetheless, Scott Kim, head of Asia-Pacific for PIMCO Prime Real Estate, has confirmed the firm is currently executing a rebalancing strategy that includes reducing the India and China holdings within the approximately $12.4 billion of Asian assets it had under management as of June. Asia constituted about 12 percent of the firm’s approximately $100 billion of assets globally.

“We had enough exposure to China and India,” Kim said. “I felt this, even before the markets turned sour. It was a natural call to offload investments and take profits.”

The divestment of Waverock has been reported at a price 19 percent more than its original purchase in rupee terms, and the exit in China is expected to generate a small profit too. “Every profit counts relative to which market cycle you are in and which market you are in.”

The proceeds from these sales and any others it makes in the two countries are expected to be redeployed into the region’s more developed markets of Japan, Australia, Singapore and Korea. As of June, PIMCO had $2.7 billion of assets in Japan, $2.3 billion in Australia and $1.7 billion in Singapore, but nothing in Korea.

Scott Kim
Kim: has a reputation for making strong exit decisions

“This is an allocation play where we take out capital where there is market demand and then try to redeploy that capital,” Kim said.

For Kim, the sales represent the first meaningful transactions for the firm under his leadership in the region since he joined last June from Korea’s National Pension Service, where he led the state pension investor’s global real estate business for eight years. While there, Kim garnered a reputation for making strong exit decisions, including the hugely profitable sale of HSBC Tower in London’s Canary Wharf in 2014.

Joining with an initial objective to stabilize PIMCO’s Asian portfolio, he took over from Rushabh Desai, the firm’s first head of Asia who led its rapid growth from no assets under management to its current portfolio over a six-year period.