Pacific Investment Management Company (PIMCO), the US fixed-income behemoth with $1.82 trillion in assets under management, is among a number of US firms beefing up in Europe to capitalise on dislocation in the region’s real estate markets.
The Newport Beach, California-based firm, which is home to the world’s biggest bond fund, is looking to add a senior real estate investment professional in Europe and has hired headhunters, according to multiple sources.
PIMCO has so far made two hires in Europe as it builds its presence. Earlier this, James Gilbert, a vice president at New York’s AREA Property Partners who worked on European deals, joined the firm’s London office. His appointment added to that of senior vice president Lee Galloway, who joined in 2010. Prior to joining PIMCO, Galloway was head of credit and research in Europe at private investment firm Cambridge Place and had set up Société Générale’s European real estate lending business, White Tower.
As well as making hires, it has been actively bidding on and making investments, sometimes “piggy backing” off another investment firm, said European CMBS experts. In Germany it has struck two notable deals where the firm also has an office. In August, it bought a €238 million face value Lehman Brothers real estate debt portfolio from Germany’s Bundesbank. According to reports at the time, Germany’s central bank ended up controlling them after Lehman Brothers used them as collateral in 2008 for rescue debt finance. Reports said Lehman bought the original loans from AMB Generali in 2005 and 2006 and then securitised them in November 2007. The 66 properties securing the bonds were valued at €323 million in April and are mostly residential, mixed-use, retail and offices.
That deal followed another in March when it bought into bonds linked to the €1.4 billion ($1.8 billion) Lehman Brothers Diversity Funding CMBS. It reportedly paid around €690 million to buy all the bonds in the securitised vehicle backed by more than 800 commercial property loans issued.
The firm’s global real estate effort is led by two former JER Partners’ professionals, Devin Chen, and John Murray. Based in the California global HQ, Chen joined in November 2010 as executive vice president having left JER in June 2010 after 11 years with the firm. Murray joined in 2009 having been a US vice president for real estate acquisitions at the same company.
PIMCO invests in distressed real estate opportunities through its alternatives platform via a series of funds, notably the $2.3 billion PIMCO Bank Recapitalization and Value Opportunities Fund (BRAVO).
Other North American firms with deep pockets that are building up a presence in Europe include Fortress Investment Group, which hired Deutsch Bank’s head of European commercial real estate, Cyril Courbage earlier this year, Starwood Capital which hired Peter Denton from Germany’s WestImmo bank, and Brookfield Asset Management, which hired David Brush.