34 REAL ESTATE FORUM MARCH/APRIL 2019 www.globest.com/realestateforum
In mid-March of this year Brookfield Asset Management had a phenomenally active week.
Within a matter of days the Toronto-based conglomerate announced that was acquiring a 62% stake in
alternative manager Oaktree Capital Group for $4.7
billion, and that Brookfield Business Partners would
be selling its stake in BGIS, a global provider of
facilities management services, to CCMP Capital
Advisors for $1 billion.
The dual news was a giant blinking sign that
Brookfield’s track record of blockbuster deal acquisitions in 2018 looks bound to continue into 2019.
Indeed in February of 2019, Brookfield Asset
Management closed its latest—and largest—
flagship global private real estate fund, Brookfield
Strategic Real Estate Partners III (BSREP III), with
total equity commitments of $15 billion. The fund
reportedly will be looking at taking publicly traded
REITs private, among many other opportunities it will
Brookfield knows something about taking public
REITs private, of course. It acquired two REITs in
billion-dollar deals in 2018: GGP and Forest City. But
the company acquired much more than those well-known transactions during that halcyon year.
Indeed, as Real Capital Analytics would report by the
year end, Brookfield Asset Management was the top
buyer for the year.
Here is an overview of some of its major transactions in 2018.
The year for Brookfield started off on a low note.
In December 2017 it had teamed with PE group
Onex to make an offer to buy UK-based International
Workplace Group (IWG)—the world’s largest flex
office provider and parent company of the Regus
brand—in a deal valued at £ 2. 5 billion. After weeks
of back and forth talks, the JV walked away from the
transaction in February.
But things quickly picked up from there.
Within days of the New Year, Brookfield Business
Partners announced it would acquire Westinghouse
Electric Co., the nuclear power business that filed for
Chapter 11 protection the previous March, in a $4.6
billion deal. Then, in February, Brookfield
Residential—BAM’s North American residential
property company—bought OliverMcMillan, a
developer of mixed-use projects in N. America, for an
undisclosed price to expand its mixed-use business.
At the end of March, Brookfield gave the market
a true taste of its fire power. It announced that
Brookfield Property Partners and GGP entered into
a definitive agreement for Brookfield to acquire the
66% of GGP shares that it didn’t already own. The
cash-and-stock deal would total $9.25 billion with
GGP shareholders entitled to receive $23.50 in
cash or stock in either Brookfield or the new REIT
that would be formed when the deal closes. With a
combined 177 properties and 60 million sf, the
deal valued GGP at $15 billion. Brookfield would go
on to bring in equity partners to revamp many of
GGP’s mall. This transaction closed in August of
Soon came Brookfield’s second major REIT
takedown for the year: an all-cash buy of Forest
City Realty Trust that was valued at $11.4 billion,
including Forest City’s proportionate share of debt.
Excluding the debt, the deal was valued at nearly
$7 billion. The price was a 26.6% premium on Forest
City’s closing share price of $20.03 on June 15, the
date of the announcement. In exchange, Forest City
brought $8.2 billion in assets to the table, including
the Yards in Washington, DC and The New York Times
Altogether it added 6. 3 million sf of office space
to Brookfield’s portfolio, 2. 3 million sf of life sciences
assets, 2. 2 million sf of retail space, 18,500 multifamily units and five large-scale development projects in Metro New York, San Francisco and
Washington, DC. The deal made Brookfield the largest single commercial property owner in New York.
For this transaction, Brookfield was advised by a
Skadden legal team led by global real estate head
Harvey Uris, along with New York City-based real
estate counsels Nesa Amamoo, Christy McElhaney
and Daniel Medalie; Jeremy London, an M&A partner
in Washington, DC; and Chicago-based tax partners
David Levy and David Polster. This deal closed in
December of 2018.
In another mammoth-sized transaction, a unit of
Brookfield Asset Management acquired a 49% stake
in a nationwide portfolio of apartment buildings
owned by Carmel Partners for $914 million, valuing
the full portfolio at $1.865 billion.
The deal was a recapitalization of a Carmel
Partners’ portfolio that includes 3,864 units in seven
high-end multifamily properties in California, Hawaii
and New York, including Atelier, a new 363-unit
apartment building built last year at 801 S. Olive St.
in Downtown Los Angeles.
The acquisition was part of Brookfield’s US core-
plus strategy, which targets high-quality properties
in prominent markets across the country. The fund
backing that investment strategy launched in
Carmel Partners will maintain majority control of
the properties but the deal gives the real estate
investment firm a sizable ownership position in the
joint venture that will operate the properties. The
communities in the portfolio boast high-occupancy
and most of the buildings have some of the highest
quality finishes and amenities in their markets.
Brookfield, for its part, was also been seeking
partners on some of its New York properties. In
August, the asset manager’s real estate arm
announced that it had sold a 28% stake in a group of
its office and apartment properties in the city, giving
it proceeds of about $1.4 billion.
Other transactions in 2018 did not make the
same splash as the public-to-private plays but still
were nonetheless significant for Brookfield and the
local market. In the spring, for example, Brookfield
Ventures, Brookfield Asset Management’s then-new
venture fund, closed on a $15 million for San
Francisco-based BuildingConnected, a provider of
software for general contractors to manage the
The company also continued its ongoing work on
its Manhattan West project, a massive multi-year
endeavor that when complete will feature seven million sf of office, retail, hotel and luxury residential
space and a two-acre public park.
On the heels of completing a $350-million makeover of 5 Manhattan West, Brookfield and partner
Qatar Investment Authority secured $1.15 billion in
refinancing for the 16-story, 1.8-million-sf building.
A syndicate of lenders provided the funds, which
replaced and consolidated $570 million in financing
from Wells Fargo with a new $580-million loan. The
tower is fully leased to JPMorgan Chase, Amazon,
Peloton and Whole Foods, among others.
Brookfield Office Properties was advised on that
transaction by a Fried Frank team that included real
5 Manhattan West
666 Fifth Ave.
BROOKFIELD’S YEAR OF PLENTY