Brookfield Property Fund for Rich Investors Falls as Rates Rise

(Bloomberg.) A Brookfield Asset Management Inc. property funds for wealthy investors saw their second consecutive monthly drop in December, as rising interest rates continue to weigh on the industry.

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Brookfield Real Estate Income Trust fell 1.6% in December after a 1.9% drop in November. According to disclosures, the fund has only lost one month since its inception in 2019.

Brookfield REIT gained 12.7% in 2022 despite the poor results at the end of the year. The fund, which is worth $2.4 billion, holds offices, apartments, and logistics properties, mostly in the US. A year ago, it bought DreamWorks Animation’s campus in California for $327 million — its largest single purchase.

“Throughout 2022, third-party valuation firms began adjusting assumptions regarding property valuations that are a key component of our net asset value calculation, leading to some recent downward valuation movements in our portfolio,” Brookfield REIT said in a regulatory filing. Operating performance of the properties “continues to be strong.”

As a result of rising borrowing costs and a slowing economy, real estate funds are experiencing a difficult time. Blackstone Inc.’s $69 billion fund for well-off retail investors is limiting redemptions after receiving withdrawal requests exceeding its quarterly limit. And some of the biggest institutional investors in US commercial real estate have sought to cut their exposure to property funds managed by JPMorgan Chase & Co., Morgan Stanley and Prudential Financial, Bloomberg reported Tuesday.

Brookfield took over management of Oaktree Capital Management’s properties from its subsidiary in 2021. Bloomberg reported that the plan was to increase the portfolio in order to compete with other REITs.

Read More: Blackstone’s Property Fund for Retail Investors Is Losing Steam

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