Brookfield Asset Management Ltd.’s real estate assets dropped about 5% in the first quarter as the value of some properties fell.
(Bloomberg) — Brookfield Asset Management Ltd.’s real estate assets dropped about 5% in the first quarter as the value of some properties fell.
Fee-bearing capital in real estate funds dipped to $98 billion in the quarter, the Canadian asset manager said Wednesday, down from $103 billion at year-end.
The decline included a downward adjustment of $1.8 billion for “market valuation,” according to a company presentation.
“Unfortunately, the negative sentiment is dragging down the real estate sector more broadly,” the firm’s president, Connor Teskey, told investors during an earnings call Wednesday.
“We think that’s completely unfair.”
The Brookfield group is one of the world’s largest owners of prime office properties, with a portfolio that includes New York’s Manhattan West and London’s Canary Wharf.
Office landlords in major cities around the world are being squeezed by a combination of higher borrowing costs and lower occupancy, as many companies continue to allow employees to work from home at least part of the time.
Read more: NYC’s Empty Office Buildings Lure Rich Families Hunting Bargains
Brookfield Asset’s parent company has defaulted on mortgages covering more than a dozen office buildings, mostly in Los Angeles and around Washington.
The property market is “bifurcated” as high-quality assets perform well and lower-quality assets struggle, Teskey said on the call.
The group’s major real estate holdings are no longer publicly traded since it took Brookfield Property Partners private in 2021.
For Brookfield Asset, fee-bearing capital from what’s now called Brookfield Property Group fell to $19 billion in the first quarter from $21 billion in the first quarter of 2021.
Brookfield began raising money for its fifth flagship real estate fund in January.
The last vintage, in 2021, received $15.3 billion in commitments.
(Adds comments from investor call in third and sixth paragraphs)
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