This month, Brookfield Real Estate Income Trust made a splash buying its largest single commercial property in four years. The nontraded real estate investment trust paid $155.4 million for Boston Market Terminal near Everett, Massachusetts, a property leased to online retail giant Amazon.
Dana Petitto, chief operating officer and portfolio manager of Brookfield REIT since 2024, and managing director of finance in Brookfield's Real Estate Group since 2018, led the effort for the buyer.
Petitto has spent about two decades in Brookfield's corporate finance organization, building a four-person team into a global organization of more than 60 professionals before doing the same in London for Brookfield's European real estate platform.
CoStar News caught up with Petitto to discuss the REIT's strategy and its approach to acquisitions. The following conversation has been edited for length and clarity.
Given the unpredictable state of commercial property, how do you judge that now is the time to enter the market?
If we wait for all signs of predictability, we can really miss out on some compelling opportunities. We've learned that some of the best transactions we've made were really in periods when capital has been scarce.
We started to see the transactions market really pick up last year, but industrywide, we're not seeing levels even close to peak. The last peak was in 2021, and we're far away from that. But we are seeing really interesting opportunities and really good pricing. So, we tend to lean into moments like this, where we can be part of some of these transformative deals that are going to be additive to our track record.
How do you think about nonresidential property investments?
Logistics is a fantastic sector. Over time, it has performed extremely well. The tailwinds since COVID have benefited from even more of a boom, everything going on with onshoring and near-shoring, and obviously increases to ecommerce.
Since June of last year, we've really leaned heavily into the logistics sector, and a lot of that has to do with the pricing reset. We have been able to transact on a number of compelling opportunities. The most recent deal was the 100% acquisition by Brookfield REIT in Boston. We did two other transactions where we acquired a minority stake in two larger, diversified U.S. portfolios that were made by Brookfield's global real estate flagship opportunity fund.
That diversity of capital is a real key differentiator for us that allows us to see investment opportunities that span the entirety of the Brookfield real estate ecosystem. While rental housing will continue to be a big part of the story, we are definitely looking at additional sectors that are outside the housing realm, obviously more logistics, possibly powered shell data centers, needs-based or grocery retail and self-storage.
In your fourth quarter outlook, you mentioned looking into manufactured housing. What makes that opportunity feel right?
The rental housing sector in general continues to be an in-focus sector for us. There's just a ton of sustaining secular tailwinds there. We've got home ownership unaffordability and undersupply.
We have been investing in manufactured housing at Brookfield since 2017. It represents a subsector of the rental housing sector bucket that, in many cases, is a more affordable option compared to traditional home ownership. It's less operationally intensive to maintain for the resident. It's proven to be extremely resilient through economic cycles, and net new supply in this subsector has been close to zero for the past 15 years. So, there are opportunities there where we can start investing in this subsector a bit more.
A year from now, what do you think you'll say was the hardest call you had to make, and how confident are you that the decisions made now are going to be right?
I would say remaining patient and disciplined. Not getting to a place of complacency is probably going to be the hardest. You alluded to it earlier. This downturn has dragged on longer than most in the industry would have predicted or expected.
But we know from the past and from the long history that we've been doing this, that we definitely have strong conviction in our deal sourcing, our underwriting and our teams.
We'll strive to maximize operating performance by managing those assets ourselves and financing these investments conservatively.