Oaktree Capital Group has made significant headway in raising capital for its new value-add real estate platform after launching the strategy earlier this year.
“In terms of closed end capital raising, during the third quarter, we raised $1.2 billion of capital, primarily consisting of real estate’s new value-add strategy, which is closing on large separate accounts in advance of our anticipated marketing of a commingled fund, and a first close for Oaktree Infrastructure Fund I,” said chief executive Jay Wintrob during the firm’s third-quarter earnings call on Friday.
An analyst noted during the call that the Los Angeles-based alternative investment manager amassed approximately $600 million for value-add real estate during the three-month period.
Oaktree does not have any targeted fundraising numbers for value-add real estate, but Wintrob noted that “the potential is there for that to be an important part of our real estate platform in the years ahead.”
He added: “The addressable market is significant, and more importantly, we think it is very complementary to the resources that we have, that have done such a great job on the opportunistic side, and the relationships that we have with banks and borrowers and intermediaries and sourcing those deals over the past several years and growing that strategy quite nicely.”
Aside from value-add, Oaktree continues to actively fundraise for its existing real estate equity and debt strategies. The firm held a close for its global opportunistic property fund, Oaktree Real Estate Opportunities Fund VII, which had amassed nearly $2.5 billion as of September 30, according to the firm’s third-quarter earnings report. Wintrob said that the firm expects the fund to reach approximately $3 billion in committed capital by the end of the year.
The firm had invested 41 percent of Fund VII’s capital at the end of the third 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 17.9 percent gross return and 12 percent net return since inception as of September 30, with a 1.5x multiple of drawn capital.
Meanwhile, earlier this month, Oaktree raised $400 million for Oaktree Real Estate Debt Fund II and anticipates holding additional closes into early 2017, Wintrob said. In 2013, the firm closed on a total of $1.1 billion for Oaktree Real Estate Debt Fund I, which was producing a gross return of 26.5 percent and net return of 19.4 percent at the end of the third quarter, with a 1.2x multiple of drawn capital.
Oaktree recorded economic net income (ENI) of $263.6 million and $471 million for the third quarter and first nine months of 2016, respectively, compared to a loss of $88.6 million and income of $152.6 million for the comparable 2015 periods.