Brookfield Private Real Assets Fund

Next application deadline 12 June 2024 (5pm, cleared funds)

Brookfield Asset Management (“Brookfield”) is one of the world’s leading owners and operators of large-scale infrastructure and real estate projects, with more than 200,000 operating employees and assets under management of $916 billion, including $276 billion in real estate and $191 billion in infrastructure. 

Brookfield believes its scale is an important competitive advantage. It means it can take on projects that are too large for most other investors, and has the experience and knowledge to manage them – whether that’s buying a whole block of Manhattan (Manhattan West), Canary Wharf in London or committing to delivering 10.5 gigawatts of clean energy to Microsoft (equivalent to the output of three Hinkley C nuclear power plants). 

Historically, Brookfield’s funds have only been accessible to institutional investors.

The Brookfield Private Real Assets QIAIF Fund (GBP A Dist) has been set up to give individual investors the opportunity to get exposure to the best of Brookfield’s private real estate and infrastructure funds. 

The fund invests around 70% of its assets in private real estate and infrastructure funds, managed primarily by Brookfield, and the remainder in listed real estate and infrastructure debt and equity and cash to provide liquidity. The fund targets a 10-12% total return net of fees, with an annualised yield of 4% – not guaranteed. 

Since launch in April 2020, the fund has generated a total return of 34.45% in USD (December 2023), equivalent to an annualised return of 8.2%, net of fees.

Unlike traditional partnership based private market funds, the Brookfield Private Real Assets QIAIF Fund has a semi-liquid structure. Investors can make a lump sum investment and get exposure to the whole existing portfolio from the start; they can also request redemptions once a quarter after the first year of investment – although a long-term investment horizon is still encouraged

  • Quarterly opportunities for subscriptions and redemptions
  • Minimum investment: £100,000 – you can apply online
  • Next subscription deadline: 12 June 2024 (5pm, cleared funds)

Important: The information on this website is for experienced investors. It is not advice nor a personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value: you could lose all the money you invest.

The manager

With c.$916 billion of assets across Real Estate, Infrastructure, Renewable Power & Transition, Private Equity, Credit and Insurance Solutions, Brookfield is one of the world’s largest investors in these areas. Brookfield Asset Management is listed in the US and Canada and has a market capitalisation of $16.3 billion. Its parent, Brookfield Corporation, has a market capitalisation of $63.4 billion (March 2024).

Brookfield believes its scale gives it a distinct advantage. It can access opportunities that may be beyond the reach of other asset managers, and its experience of owning and operating businesses across the globe provides it with an information advantage. 

Brookfield’s Real Estate division manages $276 billion of assets, with around 30,000 operating employees and over 500 million square ft of commercial space. The team includes around 320 investment professionals. Brookfield invests across the real estate market, with expertise in Housing, Logistics, Hospitality, Science & Innovation, Office and Retail. As a result, its portfolio is highly diversified, ranging from Manhattan West, an eight acre “superblock” in New York’s Midtown, to the Center Parcs holiday villages in the UK. 

Brookfield’s Infrastructure division manages $191 billion of assets, with 51,000 operating employees. The team is made up of around 140 investment professionals. Brookfield invests across the Transport, Data, Utilities and Midstream sectors. Its portfolio includes a wide range of assets, including container ports, data centres, railways and natural gas pipelines.

The fund is managed by Brookfield Public Securities Group LLC, a subsidiary of Brookfield. The fund’s portfolio allocation policy is overseen by the Real Asset Solutions team. 

The Fund’s Real Asset Solutions Team is led by Managing Directors Larry Antonatos and Gaal Surugeon. Antonatos has 32 years’ industry experience and joined Brookfield in 2011. He had previously been a portfolio manager for a US REIT strategy for 10 years. Surugeon has 14 years’ industry experience and joined Brookfield in 2019 having previously managed multi-asset portfolios.

Investment strategy

The Brookfield Private Real Assets Fund seeks to provide access to the best of Brookfield’s private infrastructure and real estate expertise, as well as a managed portfolio of publicly traded real estate and infrastructure securities, in a single investment. It targets an annual total return of 10-12% net of fees, with a distribution yield of 4% – not guaranteed.

The manager seeks a roughly even split between infrastructure and real estate, with particular emphasis on “value creation strategies” in opportunistic real estate and core-plus infrastructure. The target asset allocation is shown below.

1. Private Real Assets (70% of portfolio) 

Around 70% of the portfolio is expected to be invested into private real assets funds managed by Brookfield.

50% is expected to be invested in “Opportunistic Real Estate" and “Core-Plus Infrastructure” strategies. These invest in assets that have renovation or development potential, or can be combined with other assets to benefit from economies of scale. 

10% is expected to be invested in Core-Plus Real Estate and Core Infrastructure strategies. These investments are more income focussed, although there’s potential for capital gains through operational improvements. 

10% is expected to be invested in Infrastructure and Real Estate Debt to help underpin the fund’s income generation target.

2. Liquid Real Assets (30% of portfolio) 

Around 30% is invested in a globally diversified portfolio of listed Real Estate and Infrastructure securities to provide some liquidity. 

The fund’s target allocation is below. 

The fund does not target any particular geographic split but seeks to maintain a well-diversified portfolio.

Source: Brookfield Asset Management, 30 September 2023

Fund structure

The Brookfield Private Real Asset QIAIF Fund is a sub fund of the Brookfield PSG ICAV, an Irish collective fund or “ICAV”. This is an unhedged Sterling share class.

  • One-off investment: Investors receive units in the fund and gain exposure to an established private market portfolio at outset.
  • Fast capital deployment: immediate exposure to the existing portfolio
  • Liquidity: quarterly opportunities for redemptions – that said, this should still be considered a long-term investment.

Please note: redemption requests are capped at 5% of the net assets of the fund per quarter, to allow the fund to manage its liquidity.

Redemptions within the first year of investment may be subject to an early redemption charge of 3%. In addition, redemption rights might be suspended in exceptional circumstances, as described in the Fund's offering documents.

Portfolio

The Brookfield Private Real Assets Fund currently has $36.7 million in assets. The underlying Brookfield funds in which it invests have assets and/or commitments of more than $100 billion. 

78.4% of the fund is invested in private funds (detailed below), 15.9% in liquid public securities, and 6.3% is in cash (December 2023). 

The private asset portion of the portfolio is invested in 13 Brookfield funds: 

Name Sector Vintage Allocation Fund Size
Brookfield Infrastructure Fund IV Infrastructure Equity - Core Plus 2019 14.9% $20 billion
Brookfield Strategic Real Estate Partners II Real Estate Equity - Opportunistic 2015 7.6% $9 billion
Brookfield Premier Real Estate Partners Real Estate Equity - Core-Plus Evergreen 8.8% $6.3 billion
Brookfield Infrastructure Fund III Infrastructure Equity - Core Plus 2016 11.2% $14 billion
Brookfield Super-Core Infrastructure Partners Infrastructure Equity - Super-Core Evergreen 9.6% $9.1 billion
Brookfield Strategic Real Estate Partners III Real Estate Equity - Opportunistic 2018 6.5% $15 billion
Brookfield Infrastructure Debt Fund II Infrastructure Debt 2020 4.2% $2.7 billion
Brookfield Strategic Real Estate Partners IV Real Estate Equity - Opportunistic 2021 9.4% $15.3 billion
Oaktree Real Estate Debt Fund III Real Estate Debt - Opportunistic 2020 1.7% $3 billion
Brookfield Global Transition Fund Infrastructure Equity - Renewables 2021 2.2% $13 billion
Brookfield Real Estate Finance Fund V Real Estate Debt 2016 0.5% $2.9 billion
Brookfield Real Estate Finance Fund VI Real Estate Debt 2021 0.5% $4.0 billion
Brookfield Infrastructure Fund V Infrastructure Equity - Core Plus 2022 1.3% $26.6 billion
Source: Brookfield Asset Management, 31 December 2023.

The fund has invested 43.4% in private infrastructure assets, 35.0% private real estate, 15.9% in listed infrastructure and real estate securities, and 6.3% in cash. 

The fund has a bias towards the US which accounts for 59.8% of invested assets. Europe and Asia Pacific account for 14.5% and 10.8% respectively (December 2023).

The funds top 10 underlying investments account for 23.4% of total assets, with the largest individual holding accounting for 4.4%. 

See investment portfolio by strategy (%)

See investment portfolio by region (%)

See investment portfolio breakdown by Sector (%)

Examples of portfolio holdings

National-Logistics-Brookfield.jpgNational Logistics Portfolio – largest Real Estate holding 

In 2017, Brookfield acquired a 36-property logistics portfolio in the U.S. for a price it considered to be below the cost of replacement. 

At the time of acquisition, the portfolio was 81% occupied, 70% of leases were coming to an end within four years, and Brookfield believed rents were on average 9% below market value. 

Since then, Brookfield has successfully signed new leases in line with market rent and added a further 60 high-quality assets to the portfolio.

Brookfield plans to continue increasing rents up to the market rate as they expire and expects to add more properties. The portfolio represents 4.3% of the fund’s net assets (December 2023). 

First-energy-Brookfield.jpgFirstEnergy Transmission – largest Infrastructure holding 

FirstEnergy Transmission is a portfolio of three federally regulated electric transmission utilities, spanning over 12,000 miles primarily in the US states of Pennsylvania and Ohio. 

Brookfield Super-Core Infrastructure Partners acquired a 19.9% stake in November 2021 through a limited sale process – helping Brookfield achieve an entry price it considered attractive. Brookfield acquired a further 30% stake in February 2023, with the remainder owned by FirstEnergy Corporation. 

Brookfield believes the asset is a high-quality franchise with strong regulated cashflows. At acquisition, the portfolio needed significant investment to upgrade grid reliability and resilience, supporting the modernisation of the grid in preparation for decarbonisation and electrification of the economy.

FirstEnergy Transmission aims to expand into new geographies and support the connection of new renewable power assets as they complete. The holding accounts for 4.4% of the fund’s net assets (December 2023). 

Center-Parcs-Brookfield.jpgCenter Parcs – Property platform 

Brookfield acquired Center Parcs from Blackstone in 2015, reportedly for £2.4 billion. The holiday village business provides visitors with indoor/outdoor leisure and adventure activities in a forest playground setting, a subtropical water park, spa facilities and a range of food and drinks offerings.

Under Brookfield’s ownership Center Parcs has opened a sixth site in Ireland. Since 2015, Brookfield has added around 250 new lodges and upgraded existing facilities, while investing around £100 million in new computer systems and a streamlined booking process. 

Today the company hosts more than 2 million guest a year with a 98% occupancy rate. Earnings (EBITDA) have increased by 30% since the acquisition. In the summer of 2023, Brookfield planned to sell the holiday resort but the plans were subsequently abandoned. 

The holding accounted for 1.1% of the fund’s assets (December 2023).

Student-Roost-Brookfield.jpgStudent Roost – example of previous exit 

Brookfield bought a collection of 13 UK off-campus student accommodation blocks in 2016. This was intended to be a base for a student housing platform across the UK, capitalising on unmet demand from international students in key university cities.

Brookfield transformed a collection of independent properties with outsourced operations into a leading national developer and operator of premier student housing with a recognised brand and centralized operations. This positioned the business for growth and established a replicable model that has since been used in other European markets.

Over the course of its ownership, Brookfield grew the operating portfolio to over 23,000 rooms across more than 50 properties, with a further 3,000 rooms in development. Student Roost grew to become the UK’s third-largest largest purpose-built student accommodation provider.

In Q4 2022, Brookfield successfully completed the sale of Student Roost to global institutional investors GIC and Greystar, with the business valued at around £3.3 billion. The exit resulted in a gross return of 2.8x cost.

Suburban offices – example of underperforming investment 

As is to be expected, not all investments turn out as expected. The fund’s exposure to suburban offices is one such example. 

The fund holds a small stake in offices in Maryland, part of the suburban hinterland of Washington DC. This market was hit hard by Covid as small, mostly single proprietorship, businesses and local tenants shifted to work from home permanently. This has resulted in lower demand for office space in the Maryland submarket. 

Occupancy for the Maryland portfolio declined from c.77% in 2020 to c.56% today, with the investment underperforming expectations as a result. 

Performance

The fund launched in April 2020. The track record of the fund is shown below. 

Since inception, the fund has generated a total return of 34.5% (USD, December 2023), equivalent to an annualised return of 8.2%. Past performance is no guide to the future. 

Brookfield’s Core-plus Infrastructure funds have been running for 12 years and have generated an average net IRR of 12% p.a. across five vintages. The Opportunistic Real Estate funds have been running for 16 years and have generated an average net IRR of 19% across seven vintages (December 2023). 

Together these strategies account for 53.1% of the fund (December 2023).

The track record of Brookfield Private Real Assets QIAIF S USD is shown below. Investors will be investing in the GBP A Dist share class, which has the same charging structure. 

Performance for the Sterling Distribution A share class will be shown once it has a 12-month track record.

Brookfield Private Real Assets QIAIF – Performance since inception (in USD)

Source: Brookfield Asset Management. Performance is shown in USD, net of fees, for the period 01/04/2020 – 31/12/2023. The Brookfield Private Real Assets QIAIF S share class has been used to calculate performance. Past performance is not guide to the future. Please see the factsheet for more performance data provided by Brookfield.

Tax treatment

There are no tax reliefs associated with this investment. 

The fund is an HMRC approved reporting fund. 

The fund expects to generate the majority of any returns via income distributions. For UK taxpayers, any income (whether distributed or not) will be subject to income tax. Brookfield will publish the amount of income earned within the fund within 10 months of its annual reporting period. This should then be reported on your self-assessment return.

Any realised gains should be subject to Capital Gains Tax. 

Remember, tax rules can change and tax benefits depend on circumstances.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

Private market investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. 

Investments in real estate and infrastructure are sensitive to changes in the global economic outlook. An economic slowdown or a drop in investor confidence is likely to have an impact on the value of private market investments. 

This investment is long-term and should not be considered as readily realisable. The fund invests in companies or instruments which are denominated in currencies other than the fund’s respective currency – such investments are exposed to currency fluctuations.

Unlisted investments can be difficult to price and value. Certain investments are valued based on estimated prices and therefore subject to potentially greater pricing uncertainties than listed securities.

Redemptions are available on a quarterly basis, however, these may be limited to 5% of NAV, to manage liquidity in the fund. The manager reserves the right to charge a 3% redemption penalty for redemption within the first 12 months of investment. 

Before investing, you must be an elective professional client of Wealth Club. You must be able to understand the fund’s strategy, characteristics and liquidity profile. You must also be comfortable with the potential for periods of illiquidity.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Charges 

A summary of the main charges for the fund is shown below: please note, any underlying investments may have additional charges. These will not be paid directly by you but will have an impact on returns. Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited and is governed by the Terms and Conditions of the Wealth Club Services. Please refer to the schedule of Wealth Club charges for more detail on fees paid by investors to Wealth Club, and the Prospectus and Key Information Document for more details on the charges.

Initial charge 0.5%
Annual investment charge 1.5%
Wealth Club annual custody fee (payable by Direct Debit) 0.5%
Dealing fee 0.5%
Performance fee
Redemption fee See details;

Please note: the initial charge will be deducted from your subscription; the annual custody fee will be collected by Direct Debit twice a year in arrears, so as part of your online investment application you will be asked to set up the Direct Debit instructions.
All fees and charges are stated exclusive of VAT, which may be applicable in some cases.

More detail on the charges

Deadlines and dealing process

The fund accepts investor subscriptions and withdrawal requests once per quarter. 

Subscriptions

The next subscription deadline is 12 June 2024 (5pm, cleared funds).

Redemptions 

Investors may request redemptions every quarter. Please note a 3% early redemption charge may apply. Redemptions are processed on the first day of each quarter, and requests must be received 90 days prior to that date. Please note redemptions are subject to available cash.

For instance, an investor wishing to redeem units on 1 July 2024 would need to submit an instruction by 2 April 2024. Payment should follow within up to 150 calendar days, subject to the 5% net redemption cap, see below. However, Brookfield aims to pay up to 80% of redemption proceeds within 10 business days, and the remainder within 90 calendar days – not guaranteed. 

Investors will be able to submit redemption instructions by using the Wealth Club secure message portal. 

5% of NAV redemption cap 

Redemption requests on any one dealing day will be limited to 5% of the fund’s Net Asset Value as at the relevant calculation day at the end of the preceding quarter. 

If redemptions are above 5% on any dealing day, requests will be processed on a pro-rata basis and investors will be informed accordingly on the relevant settlement date. Any redemption amount not processed will be deferred to the next dealing day unless cancelled by the Investor.

Our view

Real assets, such as real estate and infrastructure, are often viewed as the cornerstone of a long-term investment portfolio, with the potential to generate reliable cashflows with inflation protection over the long term – not guaranteed. In recent years, rising interest rates have proved a headwind for real estate and infrastructure asset values, weighing on investor sentiment. With this headwind easing, contrarian long-term investors may view this as an attractive entry point. 

The fund provides the opportunity to invest alongside institutional investors in Brookfield’s private funds. With more than $450 billion of infrastructure and real estate assets under management, and a further $102 billion in renewables, Brookfield’s scale means it could attract unique, high-quality deal flow out of reach for other managers.

The portfolio is weighted towards Core Plus Infrastructure and Opportunistic Real Estate strategies, which have achieved average net IRRs of 12% and 19% respectively since inception in 2009 and 2006. 

The fund semi-liquid structure could be an attractive feature. However, investors should be prepared to hold the fund for the long term. 

In our view, this is a compelling opportunity to gain exposure to a range of Brookfield’s private real estate and infrastructure funds, through a single fund – you should form your own view. 

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination. 

The details

Type
Multi-asset
Manager
Brookfield Asset Management
Fund assets
$36.7m
Strategy
Private and liquid real assets
Subscriptions
Available quarterly
Redemptions
Available quarterly (by request)
Next subscription deadline
12 Jun 2024
Last updated: 29 May 2024