Pimco buying office REIT for $2.4 billion

6M SF in Portfolio Of Columbia Property Trust

Investment manager Pimco is bullish on the future of the office sector, announcing plans to acquire Columbia Property Trust of New York in a $2.2 billion deal.

The Newport Beach-based bond and mutual fund giant said last week that the funds it manages plan to acquire the office-focused real estate investment trust (NYSE: CXP) for $19.30 per share in cash; the deal totals about $3.9 billion when factoring in debt.

Shares in the REIT were trading around $22 prior to the pandemic.

Columbia Property Trust counts a 15-building office portfolio totaling 6 million square feet, and has another four offices under development, in New York, San Francisco, Washington D.C. and Boston.

It also counts an additional 8 million square feet under management for private investors and third parties.

Notable buildings in the portfolio include the 650 California Street office tower in San Francisco’s financial district, and the former New York Times headquarters in Times Square.

“We continue to believe that high-quality office buildings in major U.S. cities offer long-term value for our clients and Columbia has assembled a modernized, well-located portfolio of assets that we expect will perform well in the years ahead,” said John

Murray, Pimco’s global head of private commercial real estate.

The transaction, which is among Pimco’s largest real estate investment to date, is expected to close as soon as the end of the year.

Private Strategies

The deal adds to a recent push by Pimco to grow its private strategies platform, which includes opportunistic real estate equity and private lending efforts.

Last March, the firm said it would take over management of Allianz Real Estate, the real estate arm of Pimco’s parent company Allianz Group of Germany.

Just a few months later, the company placed a bid to acquire a 346,000-square-foot largely vacant San Francisco office tower from e-cigarette maker Juul for $310 million, though that deal ultimately fell through.

Five of Columbia Properties’ offices are in San Francisco and nearby Palo Alto.

In OC, Pimco’s most prominent real estate investment is the Intersect office campus in Irvine, which it owns in a venture with the local office of Houston-based office investor Hines.

The four-building property, at the intersection of Main Street and Von Karman Avenue, was listed for sale in 2019 but was pulled from the market last year amid a choppy and uncertain investment market caused by the pandemic.