The properties, located in cities such as San Antonio and Carmel, IndianaUSA, were seized in a deal that closed in September, according to a commentary filed this week by the loan manager. Pimco’s portfolio, valued at $326 million when the debt was originated in 2017, shrank 16% to $272.8 million in a December appraisal.
Pimco declined to comment, according to the Bloomberg news agency.
Commercial property owners face much higher borrowing costs that are weighing on valuations. Wall Street investors, including Blackstone Inc. and Brookfield Asset Management Ltd., have defaulted on money-losing properties rather than continue paying debt on them.
The hotels were owned by a 10-year-old Pimco real estate fund that had a 99% stake in a joint venture with a limited liability company tied to hotel operator Steven Angel, according to loan documents. Angel-owned Fulcrum Hospitality manages more than $6 billion in assets, according to the company’s website. Angel did not immediately respond to a message seeking comment.
For hotels, rising operating and capital improvement costs have dented revenue. Ashford Hospitality Trust Inc. said in July it would likely return 19 hotels to lenders, while Park Hotels & Resorts Inc. stopped making payments on two San Francisco properties.
Pimco: what’s behind the default
Pimco defaulted on a portfolio of office buildings with $1.7 billion in debt earlier this year, but continue negotiating with lenders “the best path forward to maximize recovery,” according to a commentary on the commercial mortgage-backed security.
Pimco has also been raising money for a new commercial real estate debt fund that aims to take advantage of market difficulties.as $2 trillion of existing commercial real estate loans are set to mature in five years, according to a presentation to the Pennsylvania Public School Employees Retirement System.
The Pimco Commercial Real Estate Debt Fund II was closed to new investors in August after raising $3 billion in commitments, according to a person with knowledge of the fund’s closure, who asked not to be identified citing private information.
Pimco Commercial Real Estate Debt Fund II subsequently closed its doors to new investors in August after raising $3 billion in commitments, according to a person with knowledge of the fund’s closure, who asked not to be identified citing private information.
This fund represents a strategic step of Pimco to capitalize on opportunities arising in a challenging market, where approximately $2 trillion in existing commercial real estate loans are expected to mature over the next five years, according to a presentation to the Pennsylvania Public School Employees Retirement System.
Source: Ambito
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