Brookfield takes $4bn global ‘next step’

Brookfield Asset Management, the Toronto-based real estate and infrastructure investment firm has formed a $4 billion investment consortium aimed at investing in underperforming real estate worldwide.

Canada’s Brookfield Asset Management today underlined its ambition to become a major global force in real estate investing as it announced a $4 billion consortium to acquire properties around the world.

The move was described by the Toronto-based firm – already a significant player in the major markets – as the “next step” in its global property “growth plan”.

Ric Clark, chief executive officer of Brookfield Properties, said its newly-formed consortium would invest in equity and debt in “undervalued” real estate companies or portfolios in which it can increase the value employing “operational restructuring, strategic direction, sponsorship, portfolio repositioning, redevelopment or other active asset management” methods.

The consortium would seek to make minimum equity investments of $500 million, with key targets being North America, Europe and Australasia.

The members of the consortium are sister company, Brookfield Properties Corporation and a collection of as yet unnamed institutional investors.

The two Brookfield entities said they had allocated $1 billion between them to the consortium and that institutional investors had allocated further capital of between $300 million and $1 billion each.

The firm has been gearing up for an assault on global property for months. To gain exposure to a wider investment community, it hired Bear Stearn’s former private fund placement and advisory group global co-head Leo van den Thillart as managing director in May.

A month later, the firm revealed to PERE its plans to invest in Asia, where it had established a $200 million fund to make seed investments to a much larger vehicle at a later date. The firm has opened two offices, in Hong Kong and Mumbai to facilitate this growth.

Of the $4 billion consortium, Brookfield’s Clark said: “This is the next step in our global property growth plan, as it combines our strength as one of the world’s leading real estate operating companies with our extensive expertise in corporate restructurings and strategic acquisitions.”

Brookfield Properties Corporation currently owns, develops and manages an office portfolio comprised of interests in 108 properties totaling 75 million square feet in New York, Boston, Washington, D.C., Los Angeles, Houston, Toronto, Calgary and Ottawa. Brookfield Asset Management has more than $38 billion in assets under management globally.

Cyrus Madon, senior managing partner at Brookfield Asset Management, said: “We believe that the current distressed economic environment and the dislocation both in real estate values and financing availability creates a compelling opportunity to pursue transactions on a global basis where we can utilize our restructuring and operating capabilities.”