Brookfield eyes US$25B resource to key growth

Brookfield Asset Management Inc. aims to reap US$25 billion from commercial property sales, banking on a rebound for pandemic-hit assets like malls and office towers to power its next stage of growth.

After taking its property arm private earlier this year, Brookfield has about US$30 billion of equity tied up in commercial real estate, and expects to wring almost as much cash from those holdings in the coming years to fund new investments, chief executive Bruce Flatt said in a letter to shareholders Thursday.

The outlook for malls and office towers has been bleak since COVID-19 lockdowns cleared them out early last year. Consumers’ embrace of e-commerce and the persistence of remote work arrangements have raised questions about whether people will return to those properties even after it’s safe.

Amid all the pessimism, Brookfield — which oversees about US$626 billion in assets globally, from renewable energy to insurance — spent about US$6.5 billion to acquire all the shares of Brookfield Property Partners LP that it didn’t already own.

“We believe we paid our partners a fair price, and the added benefit is the flexibility to manage these assets in the private markets,” Flatt said in his letter.

Toronto-based Brookfield considers about US$16 billion of its wholly owned real estate “irreplaceable” — office and retail-anchored properties in major cities that have tended to appreciate in value over time while providing steady cash flow, according to Flatt. The company intends to hold onto those “for a very long time, if not forever,” he wrote.