Distressed Commercial Real Estate Is In The Cross Hairs Of Brookfield Asset Management, Which Has A $16 Billion War Chest For Purchases

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15-05-2025

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In one of the largest quarterly fundraising efforts by a real estate company, Brookfield Asset Management (NYSE:BAM) has raised $5.9 billion through distressed commercial real estate, bringing its total war chest to $16 billion, The Wall Street Journal reports.
The fallout of rising interest rates has hit commercial property owners especially hard, and lenders are now pressuring them to sell, often at deep discounts, the Journal writes. Thus, real estate investment firms such as Brookfield have been sourcing fundraising efforts from institutional lenders, pension funds and endowments to take advantage.
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"We're buying at much lower prices than we would have a few years ago," Lowell Baron, chief investment officer of Brookfield's real-estate group, told the Journal. The $16 million haul that Brookfield has is the largest ever in the company's history. The Journal reports that they plan to raise another $2 billion before the fund closes.
Formerly based in Toronto, Brookfield relocated to New York in 2024 and has thus far invested a quarter of its fund in apartment buildings and warehouses at discounts of 20%- 40% from peak prices.
Private-equity real estate firms have found investors willing to get involved in large raises recently. According to real estate data and analytics firm Private Equity Real Estate, investors raised $57.1 billion in the first quarter, a vast increase from the $32.5 billion raised over the same period in 2024.
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In March, private-equity giant Blackstone (NYSE:BX) announced an $8 billion final close for its latest fund, BREDS V, to buy distressed commercial real estate in the U.S., Europe and Australia. Debt funds such as those raised by Blackstone and Brookfield became more prevalent after the 2008 global financial crisis, when traditional banks became skittish about real estate lending, the Journal reported. However, following the surge in interest rates in 2022 to curb inflation, private equity encountered difficulties in raising funds for real estate.
While Brookfield has already invested some of its money in distressed San Francisco apartment buildings, industrial real estate is also an attractive asset class, particularly multi-tenant spaces, according to Globest. Multi-tenant industrial spaces saw a 5.8% gain in Q1 compared to the same time last year.
Cap rates in multi-tenant spaces tend to rise more sharply than those in single-tenant spaces, Globest reports. This was particularly true in the Midwest and Southwest, where rates climbed to 7.57% and 6.21%, respectively. The rise in occupancy and rents, Globest reports, is being driven by e-commerce expansion, supply chain retooling, and last-mile distribution growth. Investors are thought to prefer multi-tenant spaces because they offer a hedge against financial uncertainty due to their relative stability and cash flow.
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This article Distressed Commercial Real Estate Is In The Cross Hairs Of Brookfield Asset Management, Which Has A $16 Billion War Chest For Purchases originally appeared on Benzinga.com