The current turmoil in stock and real estate markets is creating good investment opportunities for Brookfield Asset Management. Chief Executive Bruce Flatt said in a letter to Brookfield shareholders recently that the company has made “some great investments at very good valuations,” including $3 billion of real estate assets at significant discounts and at unprecedented cash-on-cash yields.
Brookfield Asset Management has raised $14.5 billion for its latest real estate opportunity fund, the Brookfield Strategic Real Estate Partners IV fund. They expect the fund to close before the end of September, and they have a target of more than $17 billion in equity. Brookfield said it’ll be the largest real estate fund it has ever raised. Meanwhile, Blackstone has also recently raised a $20 billion opportunity fund.
Flatt talked about the company’s UK dealings to illustrate why the firm is confident of its ability to keep getting good returns from real estate. For example, Brookfield built, developed, and acquired student-housing properties in the UK over seven years, creating the third-largest portfolio in the country. They recently sold the business for £3.3 billion of value to GIC after investing £700 million of equity into the portfolio. Brookfield expects to generate cash from the investment of £1.8 billion, resulting in a gain of 2.7 times its investment and an internal rate of return of 25 percent.