Brookfield to spin off asset management business

Toronto-based firm to create entity controlling fee-generating assets including real estate

Brookfield's Bruce Flatt (Brookfield, iStock)
Brookfield's Bruce Flatt (Brookfield, iStock)

Brookfield Asset Management is planning to spin off its asset management business.

The Toronto-based investment manager plans a new entity that will control Brookfield’s fee-generating assets including real estate, infrastructure, credit, private equity and renewable energy, Insider and Bloomberg reported, citing people familiar with the matter.

Brookfield’s goal is to allow investment in a publicly traded entity that generates and is separate from Brookfield’s $50 billion in directly owned assets. Brookfield CEO Bruce Flatt previously told investors a spinoff could create a company worth up to $100 billion.

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Brookfield is among the largest commercial landlords in major U.S. markets such as L.A. and New York. Its New York City portfolio includes One Manhattan West, New York by Gehry and the Eugene rental complex. It also took on a massive retail portfolio when it acquired mall operator GGP in 2018.

But the company’s byzantine corporate structure has made it a tough sell to investors. Brookfield has relied on subsidiaries that generate fees for the parent company. Its property arm, Brookfield Property Partners, was taken private last year. The company never saw much growth in its stock price. Analysts questioned some of the company’s valuations and grew concerned about whether it would be able to sustain its lucrative dividend payments.

Despite major risks to the office sector, Brookfield’s New York portfolio has not experienced much distress. Blackstone bought a 49 percent stake in ​​One Manhattan West in a deal valuing the 67-story office building at $2.85 billion. Brookfield recently put the 50-story One New York Plaza on the market. The 50-year-old office building will be a test of investors’ appetite for older Class A office properties.

[Bloomberg, Insider] — Keith Larsen