Brookfield Asset Management has hit the fundraising trail on a global real estate opportunity fund, targeting $4 billion. The fund is one of seven fundraising initiatives the Toronto-based firm is to work on over the coming two years.
Combined, these fundraising campaigns are expected to result in the raising of more than $7 billion in equity over the course of 2011 and 2012. They will include a mix of opportunistic property funds, value-added property funds and private equity strategies.
According to its first quarter report and letter to shareholders, both released Wednesday, Brookfield's $4 billion real estate fund will encompass all of its new opportunistic real estate investment activities around the globe. Further details on the vehicle were not disclosed.
News of the global real estate fund, one of the biggest to come to market since the global financial crisis, marks the first significant capital raising by Brookfield since it attracted $5.5 billion for its Real Estate Turnaround Consortium in 2009. At the annual PERE Forum: Europe last year, Brookfield chief executive Bruce Flatt indicated to the delegates that the firm's follow-up capital raising effort would likely take the form of a traditional private equity real estate fund.
Brookfield also is marketing two new private equity funds, each targeting $1 billion. The first is a follow-on fund to its Special Situations Fund series for distressed investments and the second is a private equity fund focused on Brazil. According to the company, the money for these funds is coming from an equal mix of expanded relationships with current clients and the addition of new clients to the business.
Additionally, during the first quarter of 2011, Brookfield acquired 113 million common shares of General Growth Properties (GGP), which increased its interest in the shopping mall REIT to 40 percent. The firm initially considered GGP to be a restructuring investment when it first got involved with the bankrupt company through its $5.5 billion Real Estate Turnaround Consortium, but it now considers the investment to be a long-term holding.
“GGP has a number of things working in its favor for it to grow at a healthy pace,” said Flatt during a conference call. “It has many short-term vacancies that can be converted into proper occupancies. Plus, retails sales in America are going up.”
Brookfield was able to increase its stake in GGP by issuing 45 million shares of common stock—27.5 million of which were issued to Fairholme Funds—for $1.5 billion, marking the first time Brookfield had issued any meaningful number of shares since 1995.