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Brookfield Asset Management is planning its latest flagship real estate investment fund with a target of $15B, a decline from its previous real estate fund as it copes with a turbulent property market and delinquent loans on properties in major U.S. markets.
Bloomberg first reported the news, citing anonymous sources.
The new fund would be BAM's fifth flagship. The Toronto-based investment giant, which is one of the world's largest owners of office buildings, closed on its fourth fund earlier this year, which came in at $17B.
On the company's most recent earnings call in April, Brookfield Asset Management CEO Bruce Flatt sounded an optimistic note about fundraising in the bumpy economic climate.
“Despite macroeconomic headwinds that generally make all business harder, we expect 2023 to be another very strong year for the business overall and for fundraising on par with 2022, which was a record year for our business,” Flatt said.
Brookfield has defaulted on a number of mortgages associated with office buildings, mostly in the Los Angeles and Washington, D.C., markets. The company handed over the keys to EY Plaza, a 41-floor tower in Los Angeles, where the Downtown office vacancy rate has touched 30%.
In Denver, where Brookfield owns the 56-story Republic Plaza along with insurer MetLife, similar office struggles have emerged. A $134M loan on Republic Plaza fell into delinquency earlier this year, and a bondholder report indicated the value of the property had fallen 44% in 10 years.
According to Flatt, those office building problems are isolated and don't reflect the bigger picture for the company's office holdings, which tend to be Class-A properties.
BAM was spun off of Toronto-based Brookfield Corp. in December and reported raising a record $93B last year. It has about $834B in assets under management.
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