Brookfield to tie up $1bn of core-plus deals – Exclusive

The Toronto-based alternative asset manager also is expected to close this week on a large sum of additional equity for its new strategy.

Brookfield Asset Management is preparing to close on $1 billion of US investments on Friday under its new core-plus real estate strategy, PERE has learned.

The largest of the transactions is understood to be a 7.6 million square foot industrial portfolio from TA Realty Associates for $635 million, as PERE previously reported earlier month. The properties in the portfolio are located in southern California, Dallas, Miami, New Jersey, Chicago and Atlanta and are considered last-mile logistics facilities, which are typically located within an hour’s drive of US cities’ central business districts. Last-mile logistics facilities are a nascent part of the industrial property sector that is expected to see considerable rental growth with the rise of e-commerce, according to one source.

The logistics facilities were part of a larger 45-asset industrial and office portfolio that Brookfield acquired from TA Realty for a total of $854.5 million. PERE understands that Brookfield purchased the office portion of the portfolio on behalf of its latest global real estate opportunistic fund, Brookfield Strategic Real Estate Partners II.

Brookfield also is said to be buying the headquarters building of healthcare company McKesson Corporation in San Francisco for $250 million in a sale-leaseback deal. The alternative asset manager is expected to put a significant amount of capital expenditures in the property, including renovating the building’s common areas as well as potentially upgrading its retail space.

Within the multifamily sector, the firm will be closing on the acquisition of the Alexander, an apartment property located at 4390 King Street in Alexandria, Virginia, for $70 million from Barings Real Estate Advisers. Additionally, the purchases of two multifamily properties in Dallas for a total of $55 million are expected to be finalized in May.

Meanwhile, PERE also understands that Brookfield is expected to close this week on approximately $200 million of additional equity for its open-ended core-plus fund, Brookfield Premier Real Estate Partners. Brookfield launched BPREP last year and had raised $1 billion during the fund’s first close in December. 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 9-11 percent net internal rate of return target, a 10 percent carry and a 7 percent preferred return, with a 50 percent catch-up.

With the five transactions, Brookfield now has invested or committed nearly all of BPREP’s capital. The deals account for about $455 million of equity, while roughly $500 million went toward the earlier acquisition of a seed portfolio of eight US office and multifamily assets from its publicly-traded commercial real estate company, Brookfield Property Partners. 

Brookfield declined to comment.