New Possibilities from PIMCO and Allianz Real Estate
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Michael Chandra: Real estate has become a structural allocation in most investor portfolios, and is increasingly important to investor objectives.
Text on screen: Michael Chandra, Account Manager
PIMCO and Allianz announced in March of 2020 that we would be combining our efforts. First question to Francois. Can you tell us more about the combined PIMCO and Allianz Real Estate platforms and what motivated you to combine forces?
Text on screen: Francois Trausch, Global CEO & CIO, Allianz Real Estate
Francois Trausch: So a few words about Allianz Real Estate, Allianz Real Estate was up to recently the captive investment management vehicle of Allianz, the Germany based global insurance company. And over the years, Allianz Real Estate has grew to be one of the largest global real estate investor
B-roll: London, New York and Shanghai skylines
with over $80 billion of assets under management, 70% in Europe as expected, but also 20% in the US and 10% in Asia. The majority of what Allianz Real Estate does as investments for Allianz is in the core space of the market. These are the long duration, stable years, high quality assets, which they hold over a long period of time.
B-roll: Office and residential construction
50% of the portfolio is in office investment and the remaining 50% in retail, industrial, residential, student housing. So that's a short overview of what Allianz Real Estate does.
Many of you are very familiar with what PIMCO does and for many years, PIMCO has been very active in the higher yield, shorter duration, more opportunistic part of the market.
Text on screen: TITLE – PIMCO can now offer solutions across the real estate investing spectrum:, BULLETS - Core, Core-plus, Value-add, Opportunistic
So you can see that by combining forces, PIMCO can now offer to investors, not just the opportunistic part of the business, but also the core part of the real estate market. That of course is an exciting opportunity.
Text on screen: TITLE – PIMCO’s global real estate footprint; BULLETS -- $180bn+ real estate AUM; 330+ investment professionals; 30 global office locations. IMAGE: A map of the world displays office locations for PIMCO, PIMCO & Allianz Real Estate and Allianz Real Estate.
And for that purpose, it will be able to tap into Allianz's real estate, large footprint across the world and open that footprint to non Allianz investor.
Michael Chandra: Thank you, Francois. Next question to John. John, there are a number of large investment real estate firms in the industry. What distinguishes our platform's capabilities from some of our competitors?
Text on screen: John Murray, Global Head, Private Commercial Real Estate, PIMCO
John Murray: When we think about our advantages, we think our size and our synergies across the risk spectrum, as Francois alluded to, benefits us in terms of sourcing, structuring, and underwriting.
In terms of sourcing, again, we cover the risk spectrum. In terms of size, that means we're top tier in terms of your traditional sourcing with brokers,
Text on screen: TITLE -- Specialized expertise across all four real estate quadrants. IMAGE: A circular graphic with PIMCO & Allianz Real Estate $180B+ in real estate AUM at the center, with four quadrants surrounding: Private Debt – Senior mortgages, mezzanine loans and preferred equity; Private Equity – Direct core, core+, value-add and opportunistic; Public Equity – Real estate investment trusts (REITs); Public Debt – Including commercial mortgage-backed securities (CMBS) and REIT debt.
we have over 75 plus local operating partners and/or borrowers, which is synergistic, we're integrated across all four quadrants. So today when we look at opportunities, they go beyond brokers and partners. When we think about the sources of stress today, whether it's banks, levered lending platforms in the US, or CMBS, clearly there are opportunities that emanate from non-traditional sources. Just a quick example, when we think about loan sales and banks, we're
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a large player already in the non-performing loan space, particularly in Europe, and those deep relationships that we have across the banks at PIMCO are helpful, not just in terms of the commercial real estate contacts.
And just quickly in terms of CMBS and where we see stress coming, in some of these complicated situations, whether they're recaps, structured loan sales, legacy CMBS, they require oftentimes creative structured solutions. Here again, we think we benefit from the broader PIMCO in terms of our analytics, resources and our structured credit teams.
Text on screen: The PIMCO and Allianz Real Estate platform may offer investors advantages in terms of sourcing, underwriting, and financing
Images on screen: Corporate buildings, PIMCO trade floor
And last, but certainly not least, in terms of underwriting, as we've mentioned with the $180 billion of assets under management, that means we have the bottoms up data that goes arguably beyond just broker data and gives us real time intelligence on trends and a long-term perspective.
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Please note that this communication contains the opinions of the manager as of the date sent, and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.
Past performance is not a guarantee or a reliable indicator of future results.
This summary is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, interests in any fund or to participate in any trading or investment strategy.
Investments inresidential/commercial mortgage loans and commercial real estate debt are subject to risks that include prepayment, delinquency, foreclosure, risks of loss, servicing risks and adverse regulatory developments, which risks may be heightened in the case of non-performing loans. Investments in mortgage and asset-backed securities are highly complex instruments that may be sensitive to changes in interest rates and subject to early repayment risk. Equity investments may decline in value due to both real and perceived general market, economic and industry conditions, while debt investments are subject to credit, interest rate and other risks. In addition, there can be no assurance that PIMCO's strategies with respect to any investment will be capable of implementation or, if implemented, will be successful. The value of real estate and portfolios that invest in real estate may fluctuate due to: losses from casualty or condemnation, changes in local and general economic conditions, supply and demand, interest rates, property tax rates, regulatory limitations on rents, zoning laws, and operating expenses. The current regulatory climate is uncertain and rapidly evolving, and future developments could adversely affect a CRE strategy or investment. Diversification does not ensure against loss.
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