Brookfield to capture $900m for core-plus fund – Exclusive

The Toronto-based alternative asset manager is quickly approaching a first close after launching its new real estate strategy earlier this year.

Brookfield Asset Management is set to close on nearly $1 billion of commitments for its new core-plus real estate strategy.

The Toronto-based alternative asset manager, led by chief executive Bruce Flatt, is expected to collect $900 million in the first close of its open-ended core-plus fund, Brookfield Premier Real Estate Partners (BPREP), at the end of the month, according to two people familiar with the matter.

No limited partners' commitments have been publicly disclosed to date, but PERE understands that the fund is expected to attract 50 percent to 75 percent of its capital from US investors. Earlier this month, the Houston Police Officers' Pension System disclosed that it was considering a commitment to BPREP but did not provide further details.

Brookfield declined to comment.

The firm tapped Ariel Szin, who was previously responsible for Brookfield's opportunistic property investments, to become head of the new core-plus business, and also began preliminary marketing efforts for the core-plus fund in the spring.

The size and timing of the equity haul is in line with initial fundraising projections for BPREP, which put the initial close in the range of $600 million to $1 billion, to occur between September and December.

The fund will be focused primarily on investments in US gateway cities, targeting the multifamily, retail and office property sectors in particular. PERE understands that BPREP will 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.

Other traditionally opportunistic real estate investors also have been actively raising capital for new core-plus strategies this year. For example, The Carlyle Group collected approximately $500 million during two closes for its new core-plus real estate fund, Carlyle Property Investors, PERE reported in August. The firm is expected to collect an additional $500 million by year-end, which would take its core-plus real estate fundraising to about $1 billion.

Meanwhile, Rockpoint Group raised $800 million in the first close for its second closed-ended core-plus real estate fund, Rockpoint Growth and Income Fund II, in July. That fund has a target size of $1.5 billion to $2 billion.

Brookfield has had a busy fundraising year in real estate. In addition to its core-plus capital raise, the firm held a final close on its latest global opportunistic property fund, Brookfield Strategic Real Estate Partners (BSREP) II, gathering a total of $9 billion. BSREP II is on track to be the largest private equity real estate fund to close this year.