Brookfield Asset Management‘s real estate secondaries business has backed a deal with Longpoint Realty Partners to recapitalise around two-thirds of the assets in its first fund.
The portfolio, which consists of 31 logistics properties in New Jersey, Washington, DC, Dallas, South Florida and Boston, has now been recapitalised for $700 million, affiliate title PERE has exclusively learned. With the recapitalisation, Longpoint has now divested all of the properties in Fund I, having previously exited 36 percent of the investments in the vehicle, in mostly single asset transactions.
The Boston-based logistics specialist raised $280 million for Longpoint Realty Fund I, falling short of its $375 million target because investors were opting to re-up with existing managers in the latter part of the market cycle, managing partner and founder Dwight Angelini previously told PERE.
Brookfield is executing the recapitalisation through Brookfield Real Estate Secondaries Fund, its debut vehicle targeting the strategy. The Toronto-based firm passed the halfway mark of its targeted $3 billion raise in November, Secondaries Investor reported.
This transaction marks another significant deployment for the fund, following a recapitalisation of an Elion Partners industrial park in Chicago that included an $80 million commitment to Elion’s fifth value-added fund in September and a stapled restructuring of NorthBridge Partners’ 21-asset, last-mile logistics portfolio with a gross asset value of $360 million in March.
The logistics focus of Brookfield’s real estate secondaries deals reflects the difficulty in accessing the property type through more traditional equity transactions. Landmark Partners, which Ares Management acquired last year, found that around 74 percent of the record $7 billion deployed for GP-led secondaries transactions were focused on difficult-to-access sectors, including logistics, in its year-end 2021 secondaries report.
“Demographic shifts, technological advances, and supply chain disruptions are creating significant long-term value creation opportunities for well-located real estate assets,” Marcus Day, managing director in Brookfield’s real estate secondaries division, said in a statement.
The portfolio being acquired posted a 29.9 percent net internal rate of return and a 1.5x equity multiple in the middle of last year, according to documents presented to Santa Barbara County Employees’ Retirement System, an investor in Longpoint Realty Fund I. The properties are 97 percent leased and have a roster of over 200 different tenants. Longpoint will maintain an interest in the portfolio and will continue to manage the properties day-to-day.
Brookfield and Longpoint declined to comment further on the deal when approached by PERE.
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