Brookfield bets big on insurance as real estate investments ebb

Brookfield sourced existing assets to launch a private REIT last month

National /
Aug.August 09, 2021 01:48 PM
Brookfield Reinsurance CEO Sachin Shah and Brookfield Property Partners CEO Brian Kingston (Brookfield)
Brookfield Reinsurance CEO Sachin Shah and Brookfield Property Partners CEO Brian Kingston (Brookfield)

For Brookfield Asset Management, insurance may be the new real estate.

The firm is in the process of spending $6.5 billion to take Brookfield Property Partners private after the real estate wing, flush with mall and office holdings, took a beating during the pandemic.

Meanwhile, Brookfield announced Monday it would invest billions to bulk up its newly-public insurance arm.

Brookfield Reinsurance Partners, the recent spin-off of Brookfield Asset Management, agreed to buy insurance company American National Group for $5.1 billion in an all-cash deal. American National stockholders will earn $190 in cash per share, a premium of about 10 percent to the firm’s $172.80 closing price Friday.

The acquisition comes over a month after Brookfield said it would take its reinsurance unit — a business focusing on insurance for insurance companies — public. The firm moved to expand insurance operations on the heels of low interest rates and similar acquisitions by peers
such as KKR & Co., S&P Global reported last fall.

Chief Executive Officer of Brookfield Reinsurance Sachin Shah called the latest acquisition a “milestone in the continued expansion of our insurance business.”

Meanwhile, the firm has spent the past several months doing damage control on a real estate unit that reported $2 billion in losses last year. Brookfield Asset Management announced in April that Brookfield Property Partners would be taken private — a transition that would shield the portfolio’s performance from the eyes of analysts, investors and short-sellers. The privatization completed late last month, according to Yahoo! Finance.

Brookfield Asset Management last month said it would use existing assets through subsidiary Oaktree Capital Management to launch a private real estate investment trust, according to Bloomberg.

Oaktree’s REIT has just $478 million in total assets to which Brookfield will contribute $400 million via its interest in three multifamily and office properties, a small venture for Brookfield which manages $609 billion, Bloomberg reported.

The firm, however, has proved it’s capable of scaling up operations in the past, Bloomberg said.





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