Oaktree raises $464m for opportunistic fund

The Los Angeles-based firm is also marketing its value-added fund and its second real estate debt vehicle.

Oaktree Capital Group raised $464 million for its latest opportunistic fund during the fourth quarter, the firm said in its fourth-quarter and year-end 2016 earnings report, released on Tuesday.

Chief executive Jay Wintrob said he expects the firm to continue fundraising in 2017 across various real estate strategies.

The Los Angeles-based alternative investment manager launched Oaktree Real Estate Opportunities Fund VII in July 2014 and had amassed $2.9 billion at the end of the fourth quarter. The firm had invested 41 percent of Fund VII’s capital at the end of the fourth quarter but did not provide any return information on the vehicle in its earnings results. The predecessor fund in the series, Fund VI, was generating a 16.9 percent gross return and 11.3 percent net return since inception as of December 31.

Oaktree did not raise any capital for its new value-added real estate strategy in the fourth quarter. The firm closed on large separate accounts targeting the strategy in the second quarter totaling $615 million in advance of raising a commingled fund. On the second-quarter earnings call, Wintrob said Oaktree does not have any targeted fundraising numbers for value-added real estate, but noted that “the potential is there for that to be an important part of our real estate platform in the years ahead.”

Oaktree is also raising capital for its second real estate debt fund, Oaktree Real Estate Debt Fund II, which launched in the first quarter of 2016, PERE previously reported. The firm raised $400 million for the vehicle in an October close and had raised a total of $515 million as of December 31. In 2013, the firm closed on a total of $1.1 billion for Oaktree Real Estate Debt Fund I, which produced a gross return of 25.9 percent and net return of 19 percent at the end of the fourth quarter.

Wintrob said the firm has seen significant international demand for its funds across strategies, with 60 percent of capital raised coming from ex-US investors. The firm also experienced increased interest from high-net-worth clients and advisory services firms working on behalf of such investors, which combined accounted for $4 billion of capital raised in 2017 across asset classes.

On the capital deployment side, Oaktree, like its peers, has faced an investing environment with many buyers and few sellers across asset classes, co-founder Howard Marks said on the fourth-quarter earnings call.

“We still face some of the lowest prospective returns in history,” he said. Assets are priced “on the high side of fair or the beginning of rich.”

The firm’s total assets under management rose 3 percent year-on-year to $100.5 billion as of December 31. Oaktree recorded $246.6 million in economic net income in the fourth quarter, compared with a $29.1 million loss in the same period in 2015.