Dana Petitto, Portfolio Manager for Brookfield REIT, joined Keith Black, Managing Director of RIA Channel, to discuss how liquidity is returning to the real estate market.
Brookfield Oaktree is the world’s second-largest alternative investment manager with $1 trillion in AUM. At $270 billion, real estate is the largest portfolio at Brookfield Oaktree, which also invests in private equity, infrastructure, renewable energy, and credit. Brookfield Oaktree’s investment philosophy is very disciplined, with an approach that leans into diversification of sector and geography.
Petitto, who has been at Brookfield for twenty years, is excited about today’s investment landscape. In 2022, rising interest rates and dislocation in the equity market led to lower liquidity and wider bid-ask spreads across investment types. Brookfield Oaktree had a defensive posture at that time, leaning into real estate credit investments. Even though interest rates created uncertainty, the fundamentals of real estate, including occupancy and cash flow growth, remained strong. Over the last three years, new real estate supply has been very limited, with rising construction costs moving new starts in many sectors to the lowest levels in decades. With demand remaining strong in a time of constrained new supply, liquidity is returning to real estate, and transactions are taking place. Many properties are being sold by investors who underestimated the change in interest rates and overestimated the income growth for their property portfolio.
Sector-wise, multifamily and industrial properties are still stronger than those in the retail and office sectors. With high home prices and interest rates, purchasing homes is affordable for fewer consumers, leading to continued demand for rental housing. Logistics properties continue to be in demand to hold inventories for nearshoring and onshoring businesses. As workers go back to the office, the market is experiencing a flight to quality, with the highest quality properties demanding record-high rents. Class B properties or those in less attractive markets may offer opportunities for repurposing by investors with capital.
WEBCAST – Accessing Private Markets: A Guide to Investment Vehicles
Join us for a focused discussion on why private markets continue to draw investor interest—and how to access the opportunity.
We’ll cover:
- Drivers of long-term interest in private markets
- Benefits of investing in private markets
- Understanding investment vehicles, structures, and how they work
- Key considerations for incorporating into client portfolios
Whether you’re exploring private markets for the first time or looking to deepen your expertise, this session offers practical insights and a deeper perspective.
Accepted for 1 CFP/ IWI / CFA CE Credit