Brookfield Asset Management has concluded fundraising on its first global real estate opportunity fund, Brookfield Strategic Real Estate Partners (BSREP). The Toronto- and New York-based alternative asset manager has raised $4.4 billion of capital for the fund, exceeding its $3.5 billion target.
Brookfield had amassed more than $1.5 billion of the total equity haul in the last three months. The firm had collected more than $3.8 billion in commitments for the fund as of last week, according to a filing with US Securities and Exchange Commission, but it had raised just $2.8 billion in commitments as of April 23, according to a document from the South Carolina Retirement System Investment Commission. The pension system approved a $75 million investment in the fund in May.
The final close comes more than two years after Brookfield first hit the fundraising trail to market its first global property fund, which also was its first major real estate capital raise since its $5.5 billion club fund, Real Estate Turnaround Consortium, in 2009. In a letter to shareholders in May 2011, Bruce Flatt, Brookfield’s chief executive, said that the firm was in the process of launching a real estate opportunistic fund, originally with a $4 billion target.
One year later, Brookfield held a first close of $2.1 billion for the fund, counting the Teacher Retirement System of Texas, which committed $200 million, and New York City’s five primary employee pension systems, which collectively earmarked $310 million for the fund, among BSREP’s early investors. Subsequent investors in the fund included South Carolina, the Pennsylvania Public School Employees’ Retirement System and San Francisco Employees’ Retirement System. The firm’s publicly traded real estate platform, Brookfield Property Partners, however, was BSREP’s lead investor, committing a total of $1.3 billion to the vehicle, including $1 billion in the initial close.
BSREP’s investment strategy is to acquire controlling stakes in real estate companies and, to a lesser extent, in individual properties. About 70 percent of the fund’s capital is designated for large-scale entity-level investments with an average size of $700 million, while the remainder is expected to be invested in 10 to 20 mid-cap asset-level transactions with an average size of $50 million. Brookfield has invested $1.1 billion, or about 25 percent of BSREP’s total capital raise, to date.
Platform investments for the fund have included the firm’s acquisition of an 81 percent stake in Verde Realty, a Houston-based industrial REIT, and the takeover of Australian listed REIT Thakral Holdings Group for $492 million, both of which closed last December. Last month, the firm led the takeover of EZW Gazeley, a European industrial developer that owns 5.64 million square feet of logistics properties in the region. Among the fund’s asset-level transactions is the February purchase of 19 apartment communities in the southeastern US from Babcock & Brown Residential for a total of $414 million.
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