Brookfield Raises $6B Towards Distressed Asset Fund

Brookfield Asset Management had a banner first quarter as weakened commercial real estate assets spell opportunity.

The alternative asset manager raised $5.9 billion for a new real estate fund in the first quarter, the Wall Street Journal reported. The total represented one of the largest quarterly fundraises in the sector’s history.

Added to the rest of what Brookfield has raised for the global opportunistic vehicle and the total balloons to $16 billion, the largest real estate fund in the company’s history. The company has yet to close the fund, hoping to add another $2 billion to the pot.

The money Brookfield is raising isn’t sitting and collecting dust. With property prices hovering at low levels, fund managers such as Brookfield are swooping in to buy as distressed property owners look to get out from under the thumb of lenders.

“We’re buying at much lower prices than we would have a few years ago,” Lowell Baron, chief investment officer of Brookfield’s real estate group, told the Journal.

A quarter of the money dedicated to the fun has already been sent back out the door. The fund managers have mostly invested in apartment buildings and warehouses, acquiring them at deep discounts from peak prices.

Among the fund’s investments so far were a portfolio of distressed loans backed by 2,000 San Francisco apartments — Brookfield subsequently foreclosed — and a European logistics property owner valued at $1.4 billion after Brookfield’s investment.

In the first quarter, private equity real estate funds raised $57.1 billion, according to PERE, up nearly $25 billion from the same quarter a year earlier. Blackstone closed each of the two largest funds of the quarter.

Brookfield’s opportunistic fund doesn’t signal the company is exclusively in a buying and acquiring window. This week, the company entered into contract to sell a Soho retail and office property to Meadow Partners for $40 million.

— Holden Walter-Warner