Pimco Commits Capital to Climate Resuluent Building Upgrades
Pimco Prime Real Estate, the $85 billion property arm of Allianz Group, launched a strategy to acquire aging buildings in major cities and retrofit them for climate resilience and lower carbon footprints. Raphael Mertens, the firm’s chief sustainability officer, said the approach targets older assets in strong locations that can be upgraded into greener, more marketable properties. He declined to share financial details but said the initiative focuses on markets where local policy supports climate adaptation.
The strategy comes as regulations in major economies impose stricter environmental standards on commercial buildings. A recent UK report found large sections of central London face obsolescence without major green refurbishments. Blackstone, Brookfield Asset Management, and Henderson Park Capital Partners have all pursued similar brown-to-green transactions. Galvanize, the alternative manager co-founded by Tom Steyer, said last month that higher energy costs support its decarbonization plays even as the Trump administration opposes green policy.
Pimco avoids markets where climate exposure has eroded insurance availability, including much of Florida and California and parts of Asia. Mertens named Paris, Munich, Sydney, and New York as cities that have invested adequately in climate-risk countermeasures. The firm has acquired properties in Miami’s Waterford Business District with Nuveen and owns assets in San Francisco, Palo Alto, California, and Irvine, California, after determining wildfire and climate risk remained acceptable.
First Street Technology estimated that U.S. property values could drop as much as $1.5 trillion over 30 years if landlords fail to adapt to climate change. Insurance premiums for U.S. commercial properties have climbed more than 150 percent in less than a decade, the firm reported. Mertens said many owners underestimate how quickly climate is shifting, but annual policy renewals force insurers to reprice risk as weather patterns worsen.
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