It has been almost two years since Brookfield Asset Management bought out Australia's Roberts family to take full ownership of Multiplex, the firm well known for delivering London's Wembley Stadium.
The take-private of the developer was to herald the start of an expansion by the Toronto-based real estate, power and infrastructure investor in Asia Pacific and across the continent. But since the ink dried on that deal, Asia has seen little activity from the otherwise global heavyweight with approximately $80 billion of assets under management, $35 billion of which is real estate.
The template we are currently using [in the US] has been successful so that would be where we start [in Asia] in terms of a prototype.
Brookefield's David Arthur
Brookfield's managing partner for opportunistic real estate funds, David Arthur, would be the first to admit the lack of investment activity on his firm's part in Asia – the company has not completed any deals at all on the continent. Despite that, his team has been mobilising itself to take advantage of upcoming opportunities.
Arthur told PERE that although Brookfield currently manages the majority of its real estate within primarily core strategies, opportunistic investing will take centre stage in the future.
Arthur, who leads a team of 20 professionals, said: “We are starting off small. We have put our foot in and we'll go from there depending on the opportunities, the available capital and the potential partners.”
According to Arthur, Brookfield will take a two-phase approach to setting up an investment platform in Asia. To get the ball rolling, Brook-field has dedicated a $200 million equity fund designed to finance seed purchases that could later become the first properties in a larger discretionary blind pool, pan-Asia vehicle similar in style to Brookfield's North America-focused Real Estate Opportunity Fund.
Arthur said: “The template we are currently using [in the US] has been successful so that would be where we start [in Asia] in terms of a prototype.”
To locate these seed purchases, Brookfield opened an office in Hong Kong last year and manned it with four staff led by managing partner for China, Whye Choong Low. The firm is poised to follow that by opening a further office in Mumbai this summer, bucking the trend of real estate managers and investors who are currently shying away from Indian real estate amid falling prices and folding developers. That office will be led by managing partner Devdatt Shah.
Arthur said: “Typically we would source several deals on our own before bringing in parties either into a specific deal or rolling them into a fund once we have the platform established.”
Low and Shah have been scouting for investments to dip into the available equity and Arthur said a number of deals have been considered, particularly in China. He said the firm would target large portfolios and investments into operating companies over single asset transactions and that the sectors of choice for the firm are offices and retail, with a secondary focus on industrial assets.
Brookfield's expansion into Asia should see the firm significantly grow the number of assets it holds under an opportunistic strategy. Most of the firm's opportunistic real estate investing has occurred in North America through its Real Estate Opportunity Fund which currently has $1.8 billion of assets under management, approximately 6 percent of all the firm's real estate assets. That fund closed on more than $500 million of equity and has $150 million left in dry powder.