Brookfield Asset Management, Inc. recently announced its plans to start its own private real estate investment trust (REIT) after it assumes management of the property portfolio that subsidiary Oaktree Capital Management currently oversees, Bloomberg reports.
The alternative asset manager is making this move to enhance the company’s scale and leverage Brookfield’s reputation as a CRE owner and operator, according to people familiar with the situation. The company would like to see its portfolio grow over time and eventually compete with rival REITs that companies like Blackstone Group and Starwood Capital Group manage.
Brookfield’s new company, Brookfield Real Estate Income Trust, Inc. will be formed by transferring Oaktree Real Estate Income Trust Inc.’s advisory role to Brookfield, Bloomberg reports. Oaktree REIT currently has $478 million in total assets, which include residential properties in Atlanta, Denver and Dallas as well as office CRE buildings in Arlington, VA and Los Angeles. The fund has seen returns of 10.3% since it began in December 2019.
“Oaktree has done an excellent job, generating strong returns for stockholders,” Brookfield Managing Partner Zach Vaughan said statement announcing the deal, that Bloomberg News first reported. “This transition benefits stockholders going forward through the combination of Brookfield’s sourcing networks, operating capabilities and global footprint, while maintaining the benefit of Oaktree’s leading credit expertise.”
Brookfield will contribute its interest in three multi-family and office properties to the new REIT, which is valued at more than $400 million, according to sources. The strategy will mostly stay the same, but might now include the non-U.S. markets where Brookfield has operations, Bloomberg reports. The shift is expected to take place during the fourth quarter. Brookfield-Oaktree Wealth Solutions will distribute the new REIT’s units to individual and high net worth investors. Additionally, Brookfield Asset is trying to take New York-based Brookfield Property Partners LP private in a separate transaction, according to Bloomberg.
KKR, Blackstone make REIT deals
Brookfield isn’t the only real estate firm making moves in the REIT field, Bloomberg reports. KKR & Co. announced its KKR Real Estate Select Trust Inc. in May with $150 million of its own funds and Starwood’s private REIT has approximately $7.8 billion in total assets. Meanwhile, Blackstone’s REIT, Blackstone Real Estate Income Trust, had $48.4 billion in total assets at the end of May. The company recently announced it struck an agreement to purchase American International Group, Inc.’s interest in an affordable housing portfolio for approximately $5.1 billion.
Joe Dyton can be reached at firstname.lastname@example.org.