Real Estate Investment Strategies

Investment example: U.S. CRE CDO Acquire controlling position through purchases of mezzanine and the preferred equity tranche Asset type Location Initial closing date Deal size/peak equity CRE CDO U.S. various 100% 75% Capital stack Senior August 2014 $156 million / $156 million 50% Expected holding period 1-3 years Mezz Leverage Unlevered 25% Underwritten IRR / multiple 16% / 1.4x PIMCO Preferred equity Owned 0% Transaction summary • Purchased in limited competition from a liquidating private equity fund at a discount to NAV • Controlling class positions • Collateral primarily consists of loans, CMBS and CRE CDOs Investment thesis • Utilize controlling position to exercise auction call and liquidate assets at a premium to purchase price Potential upside due to preferred share holders' right to make the final bid on all underlying asset sales during auction calls • • • Capitalize on controlling class position to uniquely access underlying assets that PIMCO believes are priced at a discount to fundamental value • Status update In July 2015 the fund purchased a 300 key hotel out of the CDO which was previously foreclosed on by the CDO servicer Optimization of revenue management has led to significant NOI growth • In December 2015 the fund acquired a senior note collateralized by two hotels • Effectuated auction in May 2016 Substantially de-levered the structure Retained mezzanine and preferred equity tranches which PIMCO believes could provide additional upside through active asset management of underlying assets As of 31 December 2016. SOURCE: PIMCO. Sample investment for illustrative purposes only. IRR represents the annualized internal rate of return for a specified period, based on capital contributed, expected distributions received and the residual value of unrealized investments. Multiple represents the ratio of (i) expected distributions received plus the residual value of unrealized investments to (ii) capital contributed. IRRS and multiples are net of deal-related expenses and gross of fund expenses. IRRs and multiples reflect PIMCO's views at the time of investment, and may no longer be accurate or reflect PIMCO's current views. Expected holding period and deal size / peak equity are subject to change. Underwritten IRR / multiple as of initial closing date. Current estimates of future returns may differ materially from the Underwritten IRR. Note: investment owned by BRAVO II; BRAVO III does not own such an investment Past performance is not a guarantee or reliable indicator of future results. There can be no guarantee that the expectations identified will be met. The case study discussed herein has been selected as a representative example of the types of transactions that are intended to be pursued by BRAVO III and has not been selected based on performance. Refer to Appendix for additional investment strategy and risk information PIMCO 16

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