Brookfield Asset Management continued its portfolio acquisition string, this time with the purchase of a nearly $1B property loan portfolio.
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Valley National Bank announced Tuesday it sold a $925M property loan pool to Brookfield at approximately a 1% discount.
The transaction adds to a growing list of acquisitions by Brookfield as the firm aggressively pursues real estate deals and frees up the balance sheet of the New Jersey-based regional bank at a time when regulators have increased scrutiny of the banking sector’s real estate exposure.
Valley National Bank will retain customer-facing responsibilities on the debt.
“Brookfield’s acquisition of Valley’s portfolio of high quality, performing loans is strategic for both parties and demonstrates our ability to step in as an alternative lender to provide creative, flexible capital solutions,” Bill Powell, managing partner for Brookfield’s credit business, said in a statement.
Ira Robbins, CEO of Valley National Bank, said the sale is part of the bank’s broader strategic balance sheet goals. The bank expects to recognize an incremental net loss in the fourth quarter related to the discounted sale price.
Valley National Bank had previously marked $823M in loans for sale and will only realize balance sheet losses in Q4 related to the remaining $102M in new loans identified for sale.
Details on the loan portfolio, including the asset mix, weren’t disclosed and a spokesperson for Brookfield didn’t respond to Bisnow’s request for comment.
Toronto-based Brookfield Asset Management, which has approximately $1T in global assets, has been an active buyer in the back half of 2024.
It paid $845M last month to buy eight Sun Belt multifamily properties from Blackstone REIT. In July, the asset manager spent $1.3B for a nearly 15M SF industrial portfolio, growing Brookfield’s industrial footprint to 425 properties totaling roughly 150M SF.
Executives at the firm are predicting a robust office recovery that will propel an overall market rebound. At an investor day event in September, President Connor Tesky said it took 30 years for Brookfield to reach $1T in assets, but he planned to reach the next trillion-dollar mark by 2029.
For Valley National Bank, the loan sale was an opportunity to strengthen its balance sheet at a time when federal regulators are scrutinizing lender’s commercial real estate exposure over concerns of systemic risk brought about by loan extensions.
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