Brookfield launches core-plus business – Exclusive

The Toronto-based alternative asset manager is rolling out a new fund and also has tapped an executive to head up the strategy.

Brookfield Asset Management is expanding into core-plus real estate. PERE has learned that the Toronto-based alternative asset manager has begun marketing its first core-plus real estate fund, Brookfield Premier Real Estate Partners (BPREP). The firm has not yet released a private placement memorandum but has begun telling investors and consultants about the new fund in recent weeks, according to multiple people familiar with the fund. Since Brookfield is in the early stages of raising the open-ended fund, no first close date has been set yet.

The fund will be focused primarily on investments in gateway cities in North America, and will be seeded with a portfolio of assets that will span multiple property types and currently are held on Brookfield’s balance sheet, these people said. PERE understands that BPREP will have similar terms to other core-plus funds, including a 9 percent to 11 percent net return target, a 10 percent carry and a 7 percent preferred return, with a 50 percent catch-up.

Meanwhile, the company has tapped Ariel Szin, a 12-year veteran of the company, to act as head of the new core-plus business. Szin, a senior vice president, previously was responsible for the firm’s platform- and entity-level opportunistic real estate investments. Brookfield declined to comment on both the new fund and Szin’s appointment, which is understood to have occurred earlier this year.

Brookfield is the latest traditionally opportunistic real estate firm that is seeking to build a core-plus platform, following in the footsteps of Rockpoint Group, The Blackstone Group and The Carlyle Group, all of which have launched core-plus real estate strategies in the past few years.

The launch of BPREP comes a decade after Brookfield first began investing in opportunistic real estate, with the 2006 launch of its debut opportunistic real estate fund, the Brazil Retail Property Fund. In April, the firm held a final close on its latest global opportunistic property fund, Brookfield Strategic Real Estate Partners (BSREP) II, raising a total of $9 billion. Szin is listed as a key person on BSREP II, according to a memorandum from consulting firm NEPC.

On behalf of BSREP II, Brookfield will focus on large, complex distressed turnarounds or recapitalizations, with approximately 70 percent of the fund’s capital to be invested in large-scale platform investments with an average equity size of $700 million and the remainder in mid-cap real estate transactions with an average equity size of $50 million, according to the NEPC document.