LONDON Dec 19 A fund managed by PIMCO, the
world's largest bond investor, has bought five UK shopping
centres with a partner, in its first foray into a secondary
European property market hit hard by the debt crisis.
Investors have been so spooked by Europe's sovereign debt
crisis and the gloomy economic outlook that many have not yet
dared to venture outside the best neighbourhoods of London,
Paris and Berlin.
The joint venture made up of a subsidiary of the $2.3
billion PIMCO Bravo fund and British retail developer NewRiver
Retail paid 85 million pounds ($138 million) for the
malls at a 9.7 percent yield, NewRiver Retail said on Wednesday.
The shopping centres are in British towns and cities such as
Leamington Spa and Hull and were sold by insurance company
Zurich Assurance, it said in a statement.
PIMCO has invested 90 percent of the equity in the joint
venture, which intends to make more purchases.
Falling sales have forced values of shopping centres outside
the best UK locations down by as much as 40 percent since the
financial crisis, property consultant Colliers International
Yields - the annual rent as a percentage of the property's
overall value - on so-called secondary malls like those the
venture bought average 8.75 percent versus 6.4 percent for
centres in thriving areas.
"This potentially sets a blueprint for additional capital to
come into the market. We know this type of equity is probably
sitting on the sidelines waiting to come in and it needed a
partner who knew the market," said Jefferies analyst Robbie
The PIMCO Bravo Fund - which is short for Bank
Recapitalization and Value Opportunities - was set up in 2010 to
buy commercial and residential mortgage loans from distressed
Its set up was part of a push by PIMCO co-founder Bill Gross
into other investments beyond bonds, which PIMCO and Gross are
best known for. Gross' PIMCO Total Return Fund with
$250 billion in assets, is the world's largest bond fund.