Brookfield Asset Management has corralled, and deployed, $1 billion for its core real estate fund in the last year, according to its second-quarter earnings report released Thursday.
The Toronto-based alternative asset manager launched the open-ended fund, Brookfield Premier Real Estate Partners, last summer, and has since fully invested the capital it raised.
BPREP is focused primarily on investments in gateway cities in North America, and was seeded with a portfolio of assets that span multiple property types from Brookfield’s balance sheet. The vehicle is understood to have similar terms to other core-plus funds, including a 9-11 percent net return target, a 10 percent carry and a 7 percent preferred return, with a 50 percent catch-up.
“Given the current size and scale of our operations, we are well suited to be a leader in this space and believe that over time our core real estate products could exceed $50 billion,” chief executive Bruce Flatt wrote in his quarterly letter to shareholders.
By the end of March, Brookfield was set to close on $1 billion of investments through the fund, PERE previously reported. The largest of the transactions was a 7.6 million square foot industrial portfolio purchased from TA Realty Associates for $635 million. The firm also bought healthcare company McKesson Corporation’s San Francisco headquarters building in a $250 million sale-leaseback deal.
Brookfield is also marketing its latest opportunistic vehicle, Brookfield Strategic Real Estate Partners III, with a $10 billion target. The firm expects to hold a first close for the fund later this year.
Separately, Flatt also detailed Brookfield’s outlook for London in both his letter to shareholders and on the firm’s second-quarter earnings call Thursday.
“The full impact of Brexit on the UK is still unknown, but our view continues to be that the effect will be moderate, and that London will remain one of the global centers of commerce for a long while,” Flatt wrote. “We see no other competitive center in Europe – and globally, few cities rival it as a welcoming market for global business.”
He said prices for high-quality London office buildings are up 30 percent compared with pre-Brexit values, and leasing remains strong.
Brookfield finished the second quarter with about $250 billion in total assets under management.