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Pimco Fund Walks Away from 20 Hotels

A joint venture fund tied to Pimco has walked away from a portfolio of 20 hotels with debt of $240 million. Unfortunately this is the world we live in when some debt which is shorter term and needs to be refinanced in this environment. Who is holding the bag on this debt is not obvious–I suppose a person could dig deep and find out, but likely it is insurance company’s and pension funds.

Interestingly Pimco has just formed a fund to buy distressed real estate.

Here is an article.

8 thoughts on “Pimco Fund Walks Away from 20 Hotels”

  1. Well hotels have been one of the last areas of real strength in RE. Marriott hilton et all common shares are at all time highs. Room rates are way up.Occupancy rates have remained strong.

  2. It’s likely part of some CMBS. What’s interesting is the current valuation of the hotels is well below the valuation in 2017 when the loans were underwritten. This could indicate that the asset values were inflated through mortgage fraud. There have been rumors of significant fraud in commercial mortgages for years (overvaluation of assets, inflated creditworthiness of borrowers, etc.) but of course no one cares until the defaults start rolling in.

    You’d think after all the fraud in RMBS that led to the collapse of CDOs and the GFC, prosecutors would be going after mortgage fraud more aggressively.

    1. LL–you are right–no one cares until loans go bad–been there done that routine in residential appraisals already. I fired WFC in 2004 over just such shenanigans and they were 40% of my business—it took a few years to come home to roost to WFC (hopefully they have changed in the last 20 years).

    2. LI, I read that article. Best part is the new distressed real estate funds they are sponsoring. Maybe they will buy the hotels back with OPM while defaulting with OPM. What a business!

    3. You have some good points.

      I wouldn’t call it fraud.

      But the valuations are definitely not indicative of value.

      Everyone in CRE knows the valuations are absurd, and if they don’t, they have their heads in the sand.

      This issue has only gotten worse with the rapid rate increase.

      The assessors value the property based on an “orderly” market. The issue is that it hasn’t been orderly for years, so when is the current market the new normal?

      This article touched on the issue last December, it’s def worse since then..


  3. Meanwhile, the PIMCO CEF funds discover gravity.

    PDI, PFN, finally reach discounts.

    Prob a good trade opp if that’s your thing.

  4. PIMCO – Wikipedia
    PIMCO manages investments in many asset classes such as fixed income, equities, commodities, asset allocation, ETFs, hedge funds, and private equity.
    More moving investments from one entity to another,.Feel like I am at the carnival watching a magic show while pickpockets move through the crowd stealing peoples wallets.

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