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PIMCO raises jumbo $5.5bn fund(2)

The California-based firm has closed its BRAVO II fund and is targeting institutions looking to shed real estate assets.

Pacific Investment Management Company (PIMCO) has closed a $5.5 billion fund seeking to buy real estate assets from banks and other financial institutions. The Newport Beach, California-based firm has held a final close on its Bank Recapitalization and Value Opportunities (BRAVO) II fund, for which it plans to invest in commercial and residential real estate assets in the US and Europe that are unwanted by current owners.

PIMCO was not willing to comment, but it was reported last year how the firm was targeting around $4 billion from the fundraising effort – much more than the $2.35 billion that PIMCO raised for predecessor fund BRAVO I. The fund is being managed by Dan Ivascyn, who recently was promoted to deputy chief investment officer after chief executive officer Mohamed El-Erian unexpectedly quit.

As revealed in an exclusive interview in the December issue of PERE, PIMCO manages some $15 billion of opportunistic real estate investments and has a dedicated team of 29 professionals in the US and Europe. The co-heads of real estate are former JER Partners professionals John Murray and Devin Chen. The head of Europe is former MGPA Europe chief Laurent Luccioni.

In the interview, talking of how and why he decided to join, Murray said he and the firm saw a “huge opportunity” opening up after the financial crisis. “PIMCO saw a tremendous opportunity to increase its global presence in commercial real estate,” he explained. “There was a global changing of the guard going on, with major banks, syndicators and private equity real estate firms either disappearing or completely paralyzed in terms of capital. That is really where the opportunity came about. I saw PIMCO’s advantage of having a huge platform to source opportunistic deals and capital, and I joined in 2009 to help build the business. Since then, we have brought in Devin, Laurent and 19 others.” The team reports to Ivascyn, who is based in Newport Beach.

In minutes recorded from a meeting of the Arkansas Local Police and Fire Retirement System investment committee last year, the investor said the fund would aim for 40 percent residential exposure, 40 percent commercial and a 20 percent allocation to special situations of distressed loans, estimated to be $13 trillion in dimension. The investor agreed to invest around $10 million with an option to add more in 2014, according to the minutes.