Pimco, Allianz explore merger of RE divisions to create $100b-plus player

Pimco, the global fixed income giant, intends to assume management control of the real estate arm of its parent company, Allianz.

Pimco, which is headquartered in Newport Beach in California, believes the ‘organic move’ will strengthen its Alternatives capability by creating a real estate manager with more than $100 bn (€88.39 bn) of real estate AUM in core, value-add and opportunistic real estate across Europe, the US and the Asia-Pacific region.

Allianz currently has more than €70 bn of real estate AUM, the majority being in core, core-plus and private lending. Pimco, which is best known for its opportunistic and credit real estate strategies, is contributing the balance as it grows to beyond €88 bn.

The companies said that nothing would change for the time being as this is a 'proposed initiative'. 

The combination is still subject to the finalisation of legally binding agreements, standard regulatory approvals and the involvement of employee representatives in Continental Europe. 

In a statement, the company said leadership of the two real estate entities will continue as it has today. Francois Trausch will continue to lead Allianz Real Estate and John Murray will continue to lead the real estate team at Pimco. Both will report to Pimco CIO Dan Ivascyn.

In the coming months, a working group comprised of leaders from Pimco and Allianz Real Estate will set out a timetable for bringing the businesses more closely together.

Others on the steering committee for the transition include Greg Hall, managing director and Pimco’s head of private strategies, and Rick LeBrun, managing director and deputy general counsel, among others.

Pimco said in the announcement that Allianz Real Estate would become an ‘important part’ of Pimco’s ‘growing’ Private Strategies platform. Emmanuel Roman, CEO, explained: ‘By incorporating Allianz Real Estate into Pimco’s existing suite of private solutions, we intend to significantly enhance our capabilities in an area that has become a critical component of our clients’ portfolios.’

Jackie Hunt, member of the board of management of Allianz SE, added: ‘Bringing two high performing, complementary specialist parts of the business together puts us in a position to provide customers a more comprehensive solution in real estate capabilities and strengthens our position in Alternatives, where we are already among the top 10 global players.’

Trausch said: ‘When we match the Allianz Real Estate global footprint and the Allianz appetite for real estate with the unparalleled access to the Pimco intellect, research, analytics, focus on performance and of course global distribution capabilities we are destined to become one of the world’s most well rounded real estate specialists and Alternatives experts.’

Explaining the structural change, Allianz said Allianz Real Estate is wholly owned by Allianz SE and currently part of its investment division. When it is transferred to Pimco it will become a part of Allianz’s asset management division.

Though Allianz has not stated this, some reports are interpreting the move as a way for Allianz to more rapidly boost management of real estate on behalf of third parties. Its initial move to manage assets on behalf of non-Allianz group members was made in 2018.

However, the decision to strengthen Pimco's Alternatives division is in line with another significant announcement made on Tuesday by another insurance group - AXA - coincidentally within 20 minutes of Allianz's. 

AXA IM said it will merge its €48 bn AUM structured finance business and its much smaller Chorus hedge fund business with its €87 bn real assets platform to create a new alternative investments business unit called AXA IM Alts. AXA IM Alts will have €137 bn of AUM after the merger.

Allianz reported last month that fourth quarter net operating profits had risen primarily thanks to higher AUM at Pimco. 


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