Key Takeaways
- • Brookfield Asset Management launched a $900 million nontraded REIT in July targeting commercial real estate liquidity needs, combining Brookfield's own assets with external portfolio holdings to address market demand for CRE solutions.
- • Nontraded REITs are experiencing record fundraising momentum, with the segment raising $21.3 billion in the first eight months of the year—already surpassing the previous full-year record of 2013—and projected to reach $35 billion for the full year.
- • The $900M Brookfield fund is part of a broader trend where major investment firms (Blackstone, Starwood, and others) are deploying capital into perpetual, unlisted REIT structures that can leverage fundraising into approximately $100 billion in total buying power across the sector.
- • Nontraded REITs are predominantly targeting multifamily and industrial assets, with their perpetual fund structure (no defined redemption dates) enabling longer holding periods and potentially reducing asset supply and trading frequency in competitive property markets.
- • August 2024 set an all-time monthly fundraising record for nontraded REITs at $3.69 billion, according to Robert A. Stanger & Co., signaling sustained institutional and alternative investor appetite for unlisted real estate vehicles offering liquidity solutions in a challenging CRE market.
Summary
Brookfield Asset Management deployed $900 million into a newly launched nontraded REIT in July, designed to address liquidity pressures across the commercial real estate sector. The fund blended Brookfield's proprietary assets with external portfolio holdings, positioning the vehicle to serve institutional and alternative investors seeking exposure to stabilized CRE assets while navigating a volatile transaction market.
The Brookfield initiative reflects accelerating momentum in the nontraded REIT segment, which has become a dominant capital deployment vehicle for alternative asset managers. Industry data from Robert A. Stanger & Co. shows the segment raised $21.3 billion through August, already exceeding the previous full-year record established in 2013. Fundraising accelerated sharply in August alone, reaching $3.69 billion—an all-time monthly high—with projections for the full year now estimated at $35 billion, revised upward from earlier $30 billion forecasts.
Major investment firms including Blackstone and Starwood are leading this capital surge into nontraded REITs, leveraging the perpetual fund structure to create substantial buying power. Industry analysts estimate that the capital raised year-to-date could translate into approximately $100 billion in total acquisition capacity once leveraged. These funds are predominantly targeting multifamily and industrial properties, sectors already experiencing competitive pricing dynamics driven by institutional demand.
The structural characteristics of nontraded REITs—perpetual investment horizons with no defined redemption dates—are reshaping CRE market dynamics. Unlike traditional finite-life funds, nontraded REITs can maintain long-term ownership positions, potentially reducing asset supply and trading frequency in key sectors. CBRE Vice Chairman Jack Fraker noted that "these nontraded REITs, when they buy these assets, they take them out of circulation for a while," a dynamic that could fundamentally alter market liquidity and pricing patterns as deployment accelerates.
The Brookfield initiative reflects accelerating momentum in the nontraded REIT segment, which has become a dominant capital deployment vehicle for alternative asset managers. Industry data from Robert A. Stanger & Co. shows the segment raised $21.3 billion through August, already exceeding the previous full-year record established in 2013. Fundraising accelerated sharply in August alone, reaching $3.69 billion—an all-time monthly high—with projections for the full year now estimated at $35 billion, revised upward from earlier $30 billion forecasts.
Major investment firms including Blackstone and Starwood are leading this capital surge into nontraded REITs, leveraging the perpetual fund structure to create substantial buying power. Industry analysts estimate that the capital raised year-to-date could translate into approximately $100 billion in total acquisition capacity once leveraged. These funds are predominantly targeting multifamily and industrial properties, sectors already experiencing competitive pricing dynamics driven by institutional demand.
The structural characteristics of nontraded REITs—perpetual investment horizons with no defined redemption dates—are reshaping CRE market dynamics. Unlike traditional finite-life funds, nontraded REITs can maintain long-term ownership positions, potentially reducing asset supply and trading frequency in key sectors. CBRE Vice Chairman Jack Fraker noted that "these nontraded REITs, when they buy these assets, they take them out of circulation for a while," a dynamic that could fundamentally alter market liquidity and pricing patterns as deployment accelerates.
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