Brookfield Snaps Up Oaktree, Adds $9B To Its Vast Pile Of CRE
Brookfield Asset Management has inked a deal to acquire a majority interest in Oaktree Capital — about two-thirds (62%) of the business — for cash and stock valued at $4.8B.
Though combined, the two companies will continue to operate separately, according to Brookfield, a major private equity player with about $350B in assets under management.
Its $161B real estate assets under management have made Toronto-based Brookfield the largest real estate investment manager in the world for six years running, ahead of PGIM, Blackstone Group and Hines, according to IPE.
For its part, Los Angeles-based Oaktree has about $120B in assets under management, of which about $9B is in real estate. Combined, the two companies will thus have about $170B in real estate assets under management.
Brookfield is one of the nation's most active traders of real estate properties and portfolios. It is reportedly close to raising $10B for its latest global real estate fund, according to IPE.
About a year ago, the company acquired mall owner GGP for $9.25B in cash in a merger that formed one of the country's largest publicly traded owners of retail properties.
In September, Brookfield closed on more than 4 acres along the Bronx's Harlem River waterfront to facilitate the borough's biggest development in years. Also last summer, Brookfield — through subsidiary Brookfield Property Partners — sold $1.4B of its NYC real estate holdings.
It still has $10B available for property acquisitions from the $15B fund it used to buy Forest City Realty Trust for $11.4B in July.
The company has its eyes on PropTech as well. Brookfield Ventures, Brookfield Asset Management’s new venture fund, plans to invest as much as $300M over the next three years in tech startups, including companies focused on real estate tech.
The vast majority of Oaktree's assets is debt of one sort or another, often in the form of distressed debt. Its debt assets under management will presumably complement Brookfield's emphasis on equity.
“This transaction enables us to broaden our product offering to include one of the finest credit platforms in the world, which has a value-driven, contrarian investment style, consistent with ours,” Brookfield CEO Bruce Flatt said in a statement.
Once the deal is done, the engorged Brookfield will have about $475B of total assets under management, enough to put it on par with industry leader Blackstone, which has about $472B in assets under management.
Eventually, Brookfield might own all of Oaktree. Beginning in 2022, former employee-unitholders will be able to sell their remaining Oaktree units to Brookfield, and Oaktree’s founders, senior management and current employee-unit holders will have the option to do so as well.
Under the schedule established for these sales, the earliest year in which Brookfield could own 100% of Oaktree is 2029.
