Brookfield Eyes Corporate Buyouts in Asia

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Brookfield Asset Management, the Canadian real-estate giant, has launched an aggressive expansion plan that will see the company invest and develop a client base in Asia.

The company, which has $180 billion in total assets--$103 billion of them in real estate--has already established a beach head in Australia.

Brookfield developed its capability in Australia rapidly, through acquisitions, rather than building from the ground up. It initially purchased Babcock & Brown Infrastructure, a listed property fund that was staggering under a massive debt load, and then Multiplex, a major Australian developer. It followed those deals up by buying Thakral Holdings, a REIT that like most of its Australian counterparts was trading at a large discount to net asset value.

Rather than build a portfolio piecemeal across Asia, Brookfield is now looking at making similar acquisitions that would see it buy up existing property businesses.

"Within three transactions, we effectively built a $20 billion business -- that's the most likely path that Brookfield is going to take in Asia to build its capability," Niel Thassim, the company's new head of Asia for its private funds group, told World Property Channel. "It is unlikely we are going to buy a building here or there. It is much more likely that we are going to do a series of transactions that allow Brookfield to secure AUM at value but also to secure a platform."

Thassim joined Brookfield in February from RREEF, where he was the head of Asia Pacific real estate. He jumped ship in June last year, as a deal for Guggenheim Partners to purchase RREEF from Deutsche Bank fell apart.

Brookfield's property portfolio is roughly double RREEF's tally of $50 billion in assets.

It also differs from many private equity investors in that it not only owns properties but also operates them. Its 650 or so office employees are augmented by 23,000 operating employees overseeing on-site management operations at the buildings they own.

"Rather than just staying at the financial investment level, asset management,  Brookfield does everything from soup to nuts," Thassim said, noting Brookfield typically plays the role of the largest investor in each of its funds. "It's very much operations as well as investments. It allows us to manage risk better."

Brookfield does not currently own any property in Asia outside Australia; it holds a portfolio of 345 office and retail properties, for a total of 300 million square feet, mainly in North and South America. 

It is now looking to develop an Asian portfolio, looking across the spectrum at office, retail and industrial property. Where many investors once viewed Asia mainly as a market to gain risky development exposure, Brookfield is looking to purchase core and value-added properties as well as building its own.

Thassim has also been charged with developing the company's client base in Asia. The region's sovereign wealth funds are viewed as key potential sources of capital, with China, Japan, South Korea, Singapore, Hong Kong and Malaysia seen as the main pools of capital. Taiwan, which recently began allowing its pension funds to invest in overseas real estate, is a new target.

"Brookfield has aspirations to be a global alternative investment manager," Thassim said. "Obviously Asia needs to be part of that both as a source of capital and as a destination to invest."