Brookfield raises half of $15B real estate fund

Canadian asset manager Brookfield has been trying to raise $15 billion for a real estate fund for a year now, and is roughly halfway there, Bloomberg reported. 

An initial closing was anticipated for this past July, but the asset manager appears poised to start closings soon with $7 billion in commitments, including its own capital. 

The climb to $15 billion would be challenging for most companies. The fourth quarter was the slowest for real estate fundraising since the onset of the pandemic, according to Preqin. 

Brookfield has had success raising money for other funds, though, including a $30 billion infrastructure fund and a $17 billion real estate fund that closed months before the $15 billion one opened.

For chief executive officer Bruce Flatt, there’s opportunity in the commercial property downturn. Brookfield can buy while prices are down, and benefit if markets recover. For investors, however, that’s a big “if,” particularly in regards to the beleaguered office sector.

Office values are down 25 percent year-over-year through December, according to Green Street. With the rise of remote working and other economic conditions, there’s no guarantee those values will ever reach previous levels again.

“We have always considered ourselves to be value investors and that often involves taking a contrarian view that is different from the rest of the market for a period of time,” Brookfield Property Partners CEO Brian Kingston told the publication.

The company has been contending with a myriad of issues in its existing portfolio, defaulting on more than $3 billion in commercial mortgages in the United States in recent months, including walking away from two prominent office towers in Los Angeles. Some investors are reeling from Brookfield’s decision to invest a post-pandemic opportunistic fund into European markets; the capital value of offices in Dublin and Brussels have experienced double-digit declines since the acquisitions, according to CBRE.

At the end of last year, S&P Global Ratings cut the credit rating of Brookfield Property Partners to junk status.

While the company is looking to raise money for its latest fund, Brookfield may ultimately be looking to pull back from real estate. The firm is looking to cut its real estate holdings by roughly $9 billion by 2028.

— Holden Walter-Warner