Brookfield Asset Management recently announced it closed its latest flagship global private real estate fund, Brookfield Strategic Real Estate Partners III (BSREP III), with total equity commitments of $15 billion, writes Globe St.’s Erika Morphy.
The BSREP III fund is currently Brookfield’s largest, as it surpassed its initial $10 billion target. More than 150 investors committed to BSREP III, including public and private pension plans, sovereign wealth funds, financial institutions, endowments and foundations, family offices and investors from Brookfield’s recently launched wealth channel. Between Brookfield and Brookfield Property Partners LP, the companies have committed $3.75 billion to the fund.
To date, BSREP III has spent more than $5 billion over 10 transactions, including its privatization of Forest City in 2018, according to Bisnow. The fund paid $6.8 billion to acquire the REIT. It also acquired a ground lease of 666 Fifth Avenue in Manhattan for $1.1 billion. The fund plans to continue to find bigger deals and potentially purchase other REITs.
“You can’t put $15 billion to work $50 million at a time,” Brian Kingston, Brookfield’s chief executive of Brookfield’s real-estate division told The Wall Street Journal. “We need large-scale transactions.”
BSREP III’s focus is on acquiring real estate assets on a value basis, which is part of a larger trend where private equity is averting core strategies and putting its attention on riskier investors.
“We plan to remain patient in deploying capital but will be ready to invest when we see the right opportunities emerge,” Kingston told Globe St.
The fund will also be looking at taking publicly traded REITs private, according to the Wall Street Journal. Currently, BSREP III has made 10 investments worldwide valued at more than $5 billion.
BSREP III is one of 674 real estate funds in market at the beginning of this year, despite signs that the closed-end private real estate market had begun to slow down in 2018. According to financial information and data provider Preqin, these funds are looking for a total of $250 billion—a significant increase from the 573 funds seeking $191 billion a year ago.