Brookfield to create an asset management company

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Brookfield’s Bruce Flatt (Brookfield, iStock)

Brookfield Asset Management plans to spin off its asset management business.

The Toronto-based investment manager plans a new entity that will control Brookfield’s fee-generating assets, including real estate, infrastructure, credit, private equity and renewable energy, Insider and Bloomberg reported, citing people close to the file.

Brookfield’s objective is to enable investment in a publicly traded entity that generates and is separate from the $50 billion in assets held directly by Brookfield. Flatt previously told investors that a spin-off could create a company worth up to $100 billion.

Brookfield is one of the largest commercial landlords in major US markets such as Los Angeles and New York. Its New York portfolio includes One Manhattan West, New York by Gehry and the rental complex Eugene. It also supported a huge retail portfolio when it acquired shopping center operator GGP in 2018.

But the company’s byzantine corporate structure made it a tough sell to investors. Brookfield relied on subsidiaries that generate fees for the parent company. Its real estate arm, Brookfield Property Partners, was privatized last year. The company has never seen much growth in its stock price. Analysts questioned some of the company’s valuations and worried about whether it would be able to sustain its lucrative dividend payments.

Despite major risks to the office sector, Brookfield’s New York portfolio hasn’t seen much trouble. Blackstone has bought a 49% stake in One Manhattan West in a deal valuing the 67-story office building at $2.85 billion. Brookfield recently brought to market the 50-story One New York Plaza. The 50-year-old office building will be a test of investors’ appetite for older Class A office buildings.

[Bloomberg, Insider] —Keith Larsen

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