PIMCO’s combined real estate platform consists of PIMCO and PIMCO Prime Real Estate. It is one of the largest and most diversified in the world, with approximately $194bn in assets as of June 2023. Drawing upon a vast market presence, proprietary investment processes and deep asset level expertise, we aim to deliver differentiated insights and a broad set of solutions across the real estate investment spectrum.
PIMCO Real Estate platform by the numbers:
- $194bn real estate AUM, including:
- $83bn private equity
- $39bn private debt
- $69bn public debt
- $2bn public equity
160+ acquisition and origination investment professionals
140 asset management professionals
31 global offices in 19 countries with real estate experts on the ground
All data as of 30 June 2023. All statistics represent the combined PIMCO and PIMCO Prime Real Estate businesses. Total AUM includes $100.5bn in estimated gross assets managed by PIMCO Prime Real Estate ( formerly Allianz Real Estate). PIMCO Prime Real Estate is a PIMCO company and includes PIMCO Prime Real Estate GmbH, PIMCO Prime Real Estate LLC, and their subsidiaries and affiliates. PIMCO Prime Real Estate LLC investment professionals provide investment management and other services as dual personnel through Pacific Investment Management Company LLC. PIMCO Prime Real Estate GmbH operates separately from PIMCO.
Sector forecasts
INDUSTRIAL: E-commerce should continue to drive demand for storage and distribution assets over the secular horizon. Desire for quick deliveries is driving demand in urban areas. Nearshoring is catalysing demand in new regions and near ports, while regulatory restrictions limit the supply of land. Limited supply and outsize rental growth suggest logistics may be among the first to see compression of capitalisation rates. Where pricing has neared a cyclical trough, investors may accept negative leverage given the sector’s growth prospects.
OFFICE: We expect to see increasing distressed sales in the US as capital structures are reset, to a lesser degree in Europe/APAC. We see the sector trifurcating. ‘Best-in-class’ assets – low carbon footprints, appealing amenities, alluring locations, and high occupancy – will likely weather the storm. Mid-quality structures will require upgrades in order to survive, meaning opportunities in ‘brown-to-green’ investments targeting Class B+/A- properties in prime Europe/APAC locations. The lowest-quality assets face obsolescence.
RESIDENTIAL: Benefits from long-term trends such as undersupply of housing, urbanisation, increasing household formations, and rising costs of home ownership. Student housing may benefit as more learners study abroad. While certain markets face oversupply in the near-term, long-term supply should be supportive of nominal rent growth over the secular horizon. With banks sidelined, we see opportunities to lend to development and value-add projects. For equity, we see potential in newer properties in select US Sun Belt and urban gateway markets at less expensive entry points.
RETAIL: We don’t expect significant further correction on prices of Class A assets. Investors will likely focus on multitenant properties in prime locations. These have proven resilient, and investors have been gradually returning, even though rental growth is likely to be muted. Equity investments in shopping centres anchored by grocery stores and retail properties in traditional, prime locations appear attractive in the US, while debt investments for assets such as these may be preferable in Europe.
DATA CENTRES: Growing demand for data centre capacity is among the most powerful secular trends in the global economy. Europe’s capacity significantly lags the US and latency and digital-sovereignty requirements necessitate local facilities. However, few platforms can credibly combine continent-wide development know-how with the technical expertise and experience needed to develop, lease and operate data centres. This barrier to entry creates an opportunity to meet demand in the highest-growth markets for facilities that can store and process vast amounts of data.
DEBT: We favour new loan origination and purchases of existing loans – including transitional lending. Focus should be on high-conviction, tactical deployment into stressed and deeply discounted assets facing immediate liquidity pressures. Overall, we prefer a mix of cyclically distressed assets benefiting from secular themes. Distressed banking sectors present opportunities to seize market share from nonbank lenders. We see potential in CRE lending, loan portfolio sales, nonperforming loans and rescue capital.
Investment principles & strategy
The PIMCO real estate platform offers strategies across public and private markets:
- Opportunistic real estate: PIMCO’s Opportunistic global real estate investments span real estate equity and distressed debt. Investments include direct equity stakes in real estate assets, companies and distressed loans.
- Core and Core+ real estate: part of the PIMCO real estate platform is one of the world’s largest Core/Core+ real estate portfolios offering deep expertise across global Core and Core+ investing with a focus on high-quality assets in primary locations.
- Real estate credit: strategies seeking to capitalise on opportunities across the real estate lending markets for the entire risk spectrum. PIMCO invests in senior loans, mezzanine loans, participating debt, B-notes, loan portfolio term financing, bridge loans, construction loans, structured, sub- and non-performing loans and distressed debt.
- Public real estate: As part of broader mandates, PIMCO manages over $72bn in public real estate assets. Investments include CMBS, CRE CDOs, secured and unsecured debt and REIT preferred/common equity.
COMPLIANCE STATEMENT
This material is provided for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy interests in any PIMCO trading strategy or investment. The investment strategies discussed are speculative and involve a high degree of risk, including loss of some or all capital. Statements on financial market trends are based on current market conditions, which will fluctuate. The views expressed are those of PIMCO and are subject to change without notice. There is no guarantee that these views are correct or that these trends will continue. PIMCO has no obligation to update the information contained herein. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2023, PIMCO.
