PIMCO moves to create real estate investment trust
Bond giant PIMCO wants REIT status for its latest investment venture. In a filing with the Securities & Exchange Commission, PIMCO is looking to raise up to $600 million in an initial public offering for the real estate investment trust. The REIT plans to list on the NYSE under the symbol PIMR. PIMCO REIT will acquire, manage and finance residential and commercial mortgage-backed securities (agency and nonagency), residential and commercial real estate loans, the filing reads. Under REIT status, which offers tax incentives, the PIMCO venture can also invest in other commercial real estate debt, residential and commercial real estate, other real estate-related assets and other financial assets. Upon completion of this offering and the concurrent private placement described below, PIMCO REIT will first acquire a portfolio of residential mortgage-backed securities, be it from Fannie Mae or Freddie Mac. PIMCO is based in Newport Beach, Calif. while PIMCO REIT will be based in Delaware. The REIT will access PIMCO's managers and, more importantly, the investor base. However, this greatest strength may also be its greatest risk. "We are dependent on our manager and its key personnel for our success and upon their access to PIMCO’s investment professionals," the filing states. "We may not find a suitable replacement for our manager if our management agreement is terminated or if key personnel leave the employment of our manager or if PIMCO otherwise becomes unavailable to us." Credit Suisse, Goldman Sachs and JP Morgan are the lead underwriters on the IPO deal. "This is our initial public offering and no public market currently exists for our common stock," the filing adds. "Concurrently with the closing of this offering, we expect to sell not less than $10 million of our common stock to certain members of our senior management team and certain other executives of PIMCO and its affiliates in a separate private placement at the initial public offering price per share." Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.