Pacific Investment Management Company (PIMCO), the US fixed-income behemoth with $1.82 trillion in assets under management, has made what is reputed to be its first direct real estate investment in Europe. The Newport Beach, California-based firm, which is home to the world’s biggest bond fund, has teamed up with REIT NewRiver Retail to buy five UK shopping centres on behalf of its $2.3 billion Bank Recapitalization and Value Opportunities (BRAVO) Fund .
PIMCO and NewRiver are paying around £95 million (€116 million; $154 million) for the assets at a 9.7 percent cap rate. The shopping centres are in secondary towns and cities, including Leamington Spa and Hull, and have been sold by Zurich Assurance. The Californian firm has contributed 90 percent of the equity in the joint venture.
News of the deal comes three months after PERE revealed how PIMCO was beefing up its European real estate team as it targets distressed deals in the region.
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.