Pacific Investment Management Company (PIMCO), one of the world’s largest asset managers with almost $2 trillion of assets under management, is set to make an assault on the battered property markets of southern Europe.
The California-based firm, best known for its bond funds, has teamed up with London asset management firm GWM Group with a view to building a portfolio of as much as €1 billion made up from properties acquired in markets including Italy and Spain and perhaps Portugal.
According to a report by Property Week, the UK commercial property magazine, the strategy for the JV, which has no predetermined lifespan, is to pick off troubled assets of maturing funds raised before the start of the global financial crisis.
Pimco, which currently manages approximately $15 billion of real estate through opportunistic investment strategies worldwide, has set aside €350 million for the venture. GWM, for its part, is expected to invest €150 million. Geared to about 50 percent loan to value and the firepower of the partnership should extend to about €1 billion.
The JV already has been seeded with an investment in Da Vinci Market Central, a Rome retail park, which GWM originally acquired from AIG Lincoln for €130 million last year but which has now been sold into the partnership.
In GWM, Pimco has found a partner well versed in making opportunistic investments in Southern Europe. Last year, PERE revealed how the firm expected to deploy up to €300 million into real estate related investments in the region over an 18 month time span.
At that stage, it had just acquired a large equity position in an Italian fund managed by Prelios, the Italian real estate investment management group formerly called Pirelli Real Estate, which controlled about 70 properties in the country. “We have a big allocation to European real estate,” revealed Gennaro Giordano, managing director at GWM Group then.
Last month, it teamed up with another US investment giant, Fortress Investment Group, in a bid to take a 40 percent stake in another Italian fund, UniCredit Immobiliare Uno, a Rome-based fund established in 1999.
Pimco is led in Europe before former MGPA European head Laurent Luccioni who was hired last year prior to MGPA’s purchase by another US asset management giant, BlackRock. Based in London, he has been charged with supplementing Pimco’s main US operations with a European platform able to invest across both equity and debt real estate markets.
Although Luccioni joined more recently, Pimco actually has already been actively investing in large European real estate such as, in 2012, a £750 million CMBS secured by 988 properties in the UK and a €239 million CMBS secured by 66 German properties. Last year, it invested in 25 Irish properties with Green REIT, Ireland’s first REIT, valued at more than €140 million.