Brookfield To Form New $900M Private REIT After Oaktree Purchase

Wall Street, stock market

Brookfield Asset Management is creating a new private real estate investment trust by combining some of its own property assets with those of Oaktree Capital Management, the private equity firm it bought in 2019.

Brookfield has taken over management of Oaktree REIT, which has $478M of assets across the U.S., including significant residential holdings. Brookfield will add three previously-owned multifamily properties valued at $400M to the REIT, Bloomberg reported, creating a vehicle with almost $900M of assets.

The plan will be to scale the vehicle, which could also potentially invest outside the U.S., Bloomberg reports.

The new vehicle gives insight into Brookfield Asset Management’s strategy in taking private Brookfield Property Partners, the $80B listed property company that owns most of the property assets Brookfield manages. Brookfield is expected to carve BPP up into smaller portfolios and raise new capital against their assets.

Private REITs have the same tax benefits as public REITs, but their shares aren’t traded on a public stock exchange. That means they are less liquid, but shares are less volatile and don’t move up or down with the movements of the general stock market. Private individuals can invest in the companies.

They are attractive companies for fund managers to run because, unlike closed-end funds, managers don’t have to give the money back every five or seven years, meaning they can earn a consistent stream of fees.

The new private REIT will be called Brookfield Real Estate Income Trust, and will be managed by Manesh Desai, managing director at Oaktree, who already oversees the existing vehicle.

Blackstone has raised significant capital for its private REIT in recent years, which now has $48B in total assets. Starwood Capital’s private REIT has $8B of assets.

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