The pending buyer of Forest City Realty Trust, the Toronto-based Brookfield Asset Management, is no peer. It's far, far bigger, #165 on the Forbes Global 2000 and #272 on the Fortune Global 500. (Greenland Holding Co., by the way, is #341 and #252, respectively, on those lists.)
As stated in the 7/31/18 press release announcing the Forest City deal:
Canada's Buffett?
In a 5/2/17 cover story, Brookfield's Bruce Flatt: Billionaire Toll Collector Of The 21st Century, Forbes likened Brookfield CEO Bruce Flatt to Warren Buffett for his long-term perspective and savvy investing strategy.
And Brookfield has been able to buy huge firms when they stumble, or other companies seen as undervalued--like Forest City. The company, once called Brascan, bought the real-estate company, Olympia & York, which includes the World Financial Center in Manhattan.
After establishing divisions in real estate, renewable energy and infrastructure, Brookfield--which took the name in 2005 built an asset-management unit to absorb outside funds: an astonishing network of "450 sovereign wealth investors, pension funds and endowments." That means it can make 100 transactions a year.
Brookfield's divisions
Brookfield's big plans
Forbes reported 4/15/18 how Brookfield "plans to install solar panels on virtually every roof of the dominant operator of logistics warehouses in China." While the firm invested $10 billion in Brazil and India last year, it sees far more opportunity in China--Flatt estimated that one-third of the company's business will be in China in 25 years.
Forbes reported 1/4/18 how Brookfield sees opportunity in nuclear power, buying Toshiba's Westinghouse Electric. And Forbes reported 11/17/17 how Brookfield was buying malls, considered a risky asset, aiming both to bring in new tenants but also to redevelop the land, potentially adding apartments, hotels, and office space.
Fortune reported 11/10/16 how Brookfield partnered with the veteran retail Macy's "to create a 'predevelopment plan' for about 50 of Macy’s real estate assets." And it reported 10/1/14 how Brookfield bought the huge Revel Casino in Atlantic City, built for $2.4 billion two years ago, for only $110 million.
The Kushner deal, and some sales
Perhaps the most controversial deal was, as the New York Times reported 8/3/18, Deal Gives Kushners Cash Infusion on 666 Fifth Avenue: Brookfield not only took a 99-year lease on the office tower for which the Kushner Companies overpaid, it paid the entire $1.1 billion rent upfront.
At the same time, the Real Deal reported 8/1/18, Brookfield Property Partners was selling part of its portfolio to “Brookfield-sponsored core real estate venture," thus raising money. That portfolio includes under-construction properties like One Manhattan West and the Greenpoint Landing megaproject.
What Brookfield says
According to its 2017 Annual Report, Brookfield Asset Management claims "three primary competitive advantages that allow us to identify and undertake transactions that others find more difficult, and to create more value from the assets that we own and operate. These are our large-scale capital, global reach and operating expertise." (See graphic at right.)
In its 2017 Annual Report, Brookfield Property Partners cites (see below) several competitive strengths that differentiate it from rival companies:
As stated in the 7/31/18 press release announcing the Forest City deal:
Brookfield Asset Management Inc. is a leading global alternative asset manager with approximately $285 billion in assets under management. Brookfield has more than a 115-year history of owning and operating assets with a focus on real estate, renewable power, infrastructure and private equity. Brookfield offers a range of public and private investment products and services, and is co-listed on the New York, Toronto and Euronext stock exchanges...
As Brookfield stated in its most recent annual report, it operates in more than 30 countries and has over 80,000 employees worldwide. The investment bank Evercore, reported The Real Deal 8/1/18, though it was a good match:
“Forest City’s embedded development, its joint ventures and its preference for secured debt would put off some bidders, but Brookfield is a very experienced developer, similar to Forest City,” the report states. “With Brookfield’s access to capital, perhaps the company will be able to more quickly accelerate development/redevelopment.”Sales are not expected in the short-term, though, for tax reasons. And Atlantic Yards/Pacific Park, well Forest City only owns 5% going forward, so that won't be a focus for Brookfield among the REIT's assets.
Canada's Buffett?
In a 5/2/17 cover story, Brookfield's Bruce Flatt: Billionaire Toll Collector Of The 21st Century, Forbes likened Brookfield CEO Bruce Flatt to Warren Buffett for his long-term perspective and savvy investing strategy.
Unlike Buffett, who's becoming an icon and guru, though, Flatt sticks with work. Wrote Antoine Gara:
Brookfield quietly owns entire city skylines in places like Toronto and Sydney. It's the biggest office landlord in London and downtown Los Angeles. In Berlin it owns Potsdamer Platz and, in London, Canary Wharf, two of the biggest real estate developments in Europe. It has 14,200 hotel rooms, including Atlantis in the Bahamas and the Diplomat in Florida, and scores of shopping malls courtesy of divisions like Rouse Properties and General Growth, and several high-end Brazil shopping centers. In all, Brookfield owns some 400 million square feet of commercial space.Indeed, that includes hydroelectric plants, electric power, wind farms, toll roads, and more--"2,000 projects across 30 countries on five continents."
And that's just the real estate. Flatt's true passion is infrastructure, which he sees as a $35 trillion opportunity...
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| From the Forbes Global 2000 |
And Brookfield has been able to buy huge firms when they stumble, or other companies seen as undervalued--like Forest City. The company, once called Brascan, bought the real-estate company, Olympia & York, which includes the World Financial Center in Manhattan.
After establishing divisions in real estate, renewable energy and infrastructure, Brookfield--which took the name in 2005 built an asset-management unit to absorb outside funds: an astonishing network of "450 sovereign wealth investors, pension funds and endowments." That means it can make 100 transactions a year.
The biggest investor, with 7%, is the Qatar Investment Authority. As shown below, it's a complicated financial structure, which folds back on itself.
Brookfield Asset Management's ownership, from its annual report
Brookfield's divisions
BAM's divisions include Brookfield Property Partners, Brookfield Infrastructure Partners, Brookfield Renewable Partners (energy), and Brookfield Business Partners (private equity). Also, Brookfield is typically a 20% investor in dozens of private funds it runs, noted Forbes.
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| From Brookfield's annual report |
Forbes reported 4/15/18 how Brookfield "plans to install solar panels on virtually every roof of the dominant operator of logistics warehouses in China." While the firm invested $10 billion in Brazil and India last year, it sees far more opportunity in China--Flatt estimated that one-third of the company's business will be in China in 25 years.
Forbes reported 1/4/18 how Brookfield sees opportunity in nuclear power, buying Toshiba's Westinghouse Electric. And Forbes reported 11/17/17 how Brookfield was buying malls, considered a risky asset, aiming both to bring in new tenants but also to redevelop the land, potentially adding apartments, hotels, and office space.
 |
| From the Fortune 2018 Global 500 |
The Kushner deal, and some sales
Perhaps the most controversial deal was, as the New York Times reported 8/3/18, Deal Gives Kushners Cash Infusion on 666 Fifth Avenue: Brookfield not only took a 99-year lease on the office tower for which the Kushner Companies overpaid, it paid the entire $1.1 billion rent upfront.
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| Click to enlarge |
What Brookfield says
According to its 2017 Annual Report, Brookfield Asset Management claims "three primary competitive advantages that allow us to identify and undertake transactions that others find more difficult, and to create more value from the assets that we own and operate. These are our large-scale capital, global reach and operating expertise." (See graphic at right.)
In its 2017 Annual Report, Brookfield Property Partners cites (see below) several competitive strengths that differentiate it from rival companies:
- Global Scale, with about 17,000 employees
- Sector and Geographic Diversification, which means diversified cash flows.
- Superior Record of Executing Transactions, thus adding value
- Strong Organic Cash Flow Growth, with escalation provisions in most leases
- Attractive Portfolio of Development/Redevelopment Opportunities, which means new investment or sales.
- Relationship with Brookfield, thus benefiting from the parent company's strengths and assets
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