Brookfield strikes first major core-plus deal – Exclusive

The Toronto-based alternative asset manager has acquired a vast US industrial portfolio on behalf of its new open-ended fund, Brookfield Premier Real Estate Partners.

Brookfield Asset Management is in the process of finalizing its first major core-plus real estate deal, PERE has learned.

The Toronto-based alternative asset management has agreed to buy a 7.6 million square foot industrial portfolio from TA Realty Associates for more than $600 million, according to two people familiar with the matter.

The transaction is understood to be closing on Friday. The properties in the portfolio are located in southern California, Dallas, Miami, New Jersey, Chicago and Atlanta and are expected to benefit from growing demand for last-mile logistics facilities with the rise of e-commerce, according to one source.

Both Brookfield and TA Realty declined to comment.

The acquisition would mark Brookfield’s first major core-plus real estate deal, which is being done through its new open-ended core-plus fund, Brookfield Premier Real Estate Partners.

Brookfield launched its core-plus real estate strategy last year, officially rolling out BPREP and tapping Ariel Szin, who was previously responsible for Brookfield's opportunistic property investments, to become head of the new business. Brookfield held a $1 billion close on the fund during the fourth quarter.

As of December 31, the firm had invested about half of the vehicle’s capital in a seed portfolio of eight office and multifamily assets across the US, according to its fourth-quarter earnings report. The seed portfolio was understood to be acquired from Brookfield’s publicly-traded commercial real estate company, Brookfield Property Partners. The firm also is said to have made a few small core-plus deals on behalf of BPREP, but had not executed any transactions of scale in the story until the TA Realty portfolio acquisition.

BPREP will be focused primarily on investments in US gateway cities, targeting the multifamily, retail, industrial and office property sectors in particular. BPREP is understood to have similar terms to other core-plus funds, including a 9 percent to 11 percent net internal rate of return target, a 10 percent carry and a 7 percent preferred return, with a 50 percent catch-up.