Brookfield targets $17bn for fourth flagship real estate fund

After announcing plans to privatize its listed real estate platform earlier this year, the firm will now try to raise its biggest private fund ever.

Brookfield Asset Management has launched the fourth fund in its Strategic Real Estate Partners series with a target of $17 billion, PERE has learned.

The opportunistic vehicle would be the largest ever for the Toronto-based manager, surpassing BSREP III, which closed on $15 billion in 2019.

A source familiar with the fund confirmed media reports that BSREP IV would, like its predecessor vehicles, invest across the spectrum of property types and real estate operating companies and be open to opportunities in North America, Europe, Australia and Brazil.

Brookfield declined to comment on the report.

Brookfield is targeting a gross return of 19 percent and a net internal rate of return of 15 percent for BSREP III, according to Brookfield Property Partners’ year-end disclosure from 2020. At that time, the fund had yet to deploy nearly a quarter of its capital. Brookfield also projects net IRRs of 19 percent for BSREP I and 13 percent for BSREP II, according to Brookfield Property Partners’ fourth-quarter supplemental filing.

BSREP IV will be the first vehicle in Brookfield’s flagship series to not include public market capital from Brookfield Property Partners, or BPY, the firm’s listed platform. Earlier this year, Brookfield Asset Management announced its intention to take BPY private, thus taking away a significant source of limited partner capital from its real estate funds as well as a fee revenue stream for the parent company.

Structured as a master limited partnership, BPY raises capital on the New York and Toronto stock exchanges to invest in both Brookfield’s core real estate holdings and participate in its opportunistic funds. It accounted for 31 percent of the equity in BSREP I and 26 percent of BSREP II, or roughly $1.3 billion and $2.3 billion, respectively, according to the company’s public disclosure. BPY played a smaller role in BSREP III, accounting for just 7 percent of the fund, or a little more than $1 billion.

Brookfield Asset Management will continue to participate in BSREP IV as it has in the past, akin to a typical GP co-invest, a source familiar with the fund told PERE. 

Brookfield has $600 billion of assets under management, including more than $200 billion of real estate.