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Brookfield Closes $4B Debt Fund, Surpassing Initial Target By $1B


Brookfield Asset Management has closed its latest real estate debt fund with over $1B in funding above its initial target.

The investment giant closed the Brookfield Real Estate Finance Fund VI, a $4B debt fund that will focus on lending for high-quality real estate assets mainly in major U.S. markets, with occasional deals in the UK and Europe, Brookfield announced Friday. It said the fund, which had an initial target of $3B, has already made more than $700M in commitments. 

"Our fundraising effort has gone exceptionally well, and we appreciate the strong support we have received from our investors," Brookfield Managing Partner Andrea Balkan, who oversees the fund, said in a release. "We have been actively investing and are excited about the opportunities to generate attractive, risk-adjusted returns on real estate debt investments.” 

Nearly 50 investors contributed to the fund, including pension plans, endowments and insurance companies from the United States, Canada, Europe, and Asia Pacific. Brookfield also pitched in $400M.

The debt fund market in North America has been hot this year. In Q3, 22 private debt funds secured $27B in capital, according to data from Preqin.

The flood of capital into real estate this year has increased competition among debt funds and other lenders, leading them to place loans and higher leverage deals than in previous years. At a Bisnow event in November, TruAmerica Multifamily co-Chief Investment Officer Matt Ferrari said he is seeing said debt funds financing deals at loan-to-cost ratios in the 70% to 80% range, though he said his firm doesn't typically do deals in that range.

LGA Capital founder Jason Gerstein, a finance broker, also said at the November event that he is seeing debt funds get more aggressive on their leverage ratios. 

"There’s a little bit of concern with how aggressive some of the debt funds are getting, so we’re starting to explore alternative options to try and keep our leverage points down on the deals we’re working on around the country," Gerstein said.