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Oaktree Becomes Latest Investment Manager to Launch Non-Traded REIT, Looking to Raise up to $2 Billion

New REIT will Focus on Acquiring Properties in Non-Gateway Markets Where it Believes it Can Obtain More Attractive Yields
February 16, 2018
John Brady, a managing director and head of Oaktree's global real estate group, will lead the new non-traded REIT, Oaktree Real Estate Income Trust. Credit: Oaktree Capital Group

Oaktree Capital is joining others of its class of global investment managers in launching a non-traded REIT to invest in commercial properties.

The Los Angeles-based firm filed papers to launch Oaktree Real Estate Income Trust to invest primarily in office, multifamily and industrial assets. The REIT is looking to raise up to $2 billion.

Oaktree Capital specializes in alternative investments, with $100.2 billion in assets under management as of year-end 2017.

Oaktree’s real estate group is an experienced fundraiser having organized and managed 16 real estate funds and separate accounts and five co-investment vehicles. In the last 10 years, it said it has invested in more than 150 U.S. properties valued at $4.56 billion.

The firm's real estate group comprises 50 investment professionals in seven offices worldwide led by John Brady, who joined Oaktree in 2007. Brady will be chairman and CEO of the REIT.

In its filing, Oaktree REIT said it will seek to acquire real estate assets at discounts to market prices, sourcing deals primarily through its relationships with joint venture partners. For the most part, it plans to focus outside the major gateway markets of Boston, Chicago, Los Angeles, New York, San Francisco and Washington DC. Oaktree said it believes it can obtain much more attractive yields by acquiring properties in non-gateway markets.

Oaktree joins a growing list of major investment firms to expand into non-traded REIT fundraising. The Blackstone Group kicked off the trend in September 2016. So far, other big investors that have followed its lead into the non-traded REIT sector include Nuveen's TH Real Estate, BGC Partners' Cantor Fitzgerald, Starwood Capital Group, KKR & Co., and TPG Capital.

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