Brookfield Is Raising Big Money For New Real Estate Funds

Brookfield Asset Management has begun the process of raising its next giant opportunity fund to buy underpriced real estate and has raked in new capital for a fund to provide debt to real estate owners.

Speaking after BAM’s 2020 results earlier this month, Chief Executive Bruce Flatt said the firm is in the market raising capital for the follow on to Brookfield Strategic Real Estate Partners III, which raised $15B in equity between 2017 and the start of 2019.

Flatt gave no details of fund size, but such funds are typically the same size or bigger than their predecessor, as long as the predecessor makes a good return. Brookfield said in December it was projecting the third fund would make a 19% gross internal rate of return and a gross multiple on invested capital of two times.

“The size of our flagship fund offerings differentiates us in the scale of things that we do,” Flatt said on a conference call. “And this scale in itself creates opportunities. So this is additive to the franchise in many ways. Specifically, we're now in the market fundraising for our fourth real estate flagship fund.”

BAM’s opportunity funds invest across the globe, but typically in North America, the UK and Europe. They typically invest in sectors other than office and retail that the listed Brookfield Property Partners specialises in. That takes in rented residential, student housing, hospitality and logistics.

BAM is in the process of trying to take Brookfield Property private, buying the shares in the company it does not already own. Flatt said that once BAM bought Brookfield Property, it would sell some of its assets outright and use others as seed assets for new funds.

BAM is also well underway raising equity for its sixth real estate debt fund, Brookfield Real Estate Finance Fund VI. The Minnesota State Board of Investment is planning a $200M commitment to the fund, which has a target of $3B, IPE reported.

The fund will provide loans for new acquisitions and recapitalisations and will buy real estate debt, with a focus on debt from 60% to 80% of the loan-to-value ratio of a property.

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