A trillion here, a trillion there...
Eye-catching stats from Brookfield's recent pitch deck (slide 4)
---- Backstory ----
Brookfield, the second largest alternative investment manager, recently hosted its annual 'investor day.' Several familiar themes emerged...
-- The big are getting bigger
-- New funding sources (i.e., insurance)
-- Retail channels are just heating up
-- New products on the horizon
-- Great investing environment
-- Opportunity to lead in the rush to decarbonize
-- Big infrastructure plays
---- Growth opportunities ----
But, out of the nearly 200 slides presented in its main slide deck, slide 4 stood out to us within the real estate portion of the discussion.
Brookfield's claims:
-- $2.8 trillion in loan maturities
-- $52 billion of open-end fund redemptions
-- 25% REIT discounts to NAV
Our observations:
-- Outstanding U.S. commercial mortgages total about $4 trillion.
-- The total ODCE index is about $210 billion.
-- Green Street has REIT values trading around NAV.
Context:
-- It took Brookfield 25 years to get to $1 trillion in AUM.
-- Brookfield expects to get its next trillion in 5 years.
-- Brookfield expects to deploy these assets in private investments.
---- Takeaway ----
A 10 trillion dollar market (i.e., the U.S. commercial real estate market at the recent peak) sounded huge when the largest investors were writing $100-200 million checks from billion-dollar bank accounts. But the real estate market may get very small as those billions become trillions.
Ps -- Will this trend lead to increased capital availability for secondary/tertiary markets, non-traditional property types, and international investments?
Read the full report here.
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