Deals

Brookfield expands investment consortium to $5bn

Having already corralled $4 billion of equity commitments for a global opportunity investing consortium, the Toronto-based firm has swollen its kitty by a further $1bn as two more investors sign up.

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Brookfield Asset Management, the Toronto-based alternative asset management firm, has garnered a further $1 billion for its $4 billion Real Estate Turnaround Consortium.

According to a report by the Financial Times, Brookfield is adding two unnamed investors to a four- strong group, including sovereign wealth funds and institutional investors, that are committed to investing in distressed real estate related opportunities, principally in Europe, North America and Australasia.

Brookfield itself is contributing $1 billion to the consortium using its own resources and those of sister company, New York-listed Brookfield Properties Corporation.

The capture of more commitments to the consortium will compound the current belief in the market that investors are keen to be more empowered in the investment decision making process.

While blind pool investing – where investors committed capital to a fund managed by a sponsor with total discretion on investments – was popular in the lead up to the credit crunch and the global economic downfall , many investors are demanding the ability to scrutinise deals for themselves. One feature of Brookfield’s Real Estate Turnaround Consortium includes a right of first refusal on any deal offered by the firm.

When interviewed by the Financial Times, Ric Clark, chief executive of Brookfield Properties, said: “Our platform was largely around restructuring in the early 1990s. Our view is that more than any other part of the economy, the real estate market has been disproportionately hit. We again are looking for distressed situations that need capital.”

He said the firm could potentially spend between $10 billion and $15 billion, including leverage, through the consortium and the UK was one of its main targets. Others include the US, Europe, Australia and Brazil. Minimum deal allocations will be $500 million of equity.

Brookfield Asset Management is one of the world’s biggest managers of real estate with more than $38 billion of assets on its books, however only a small proportion of that has been bought utilising an opportunistic strategy.