Canada's Brookfield Asset Management eyes $1 billion realty lending club

After building a sizeable commercial property portfolio, Canada's Brookfield Asset Management is looking to scale up its lending to real estate developers, said a source in the know.

Brookfield has lent $450 million (Rs 30.15 billion) to developers and is looking to do a business of $1billion (Rs 67 billion) in the next two-three years, said a source close to the investor.

"They see a huge potential in the segment after Real Estate Regulatory Authority (Rera), insolvency law and want to scale up the book quickly," said the source.

Late last year, Brookfield invested around Rs 8 billion in Bengaluru-based property developer from its $9 billion global fund in the form of structured debt. The first deal from its global fund saw Brookfield investing Rs 4.5 billion in Peninsula Land’s premium project in Byculla, Mumbai.

Brookfield has asset of about $6 billion (Rs 402 billion) in real estate and infrastructure in the country.

When contacted, Brookfield declined to comment.

Brookfield has a commercial portfolio of 24 million square feet, behind its global rival Blackstone, which has a portfolio of 38 million square feet. Though Blackstone also wanted to get into private debt, not much is known about that business.

KKR’s real estate focused NBFC, in which Singapore’s GIC is an investor, has lent over $ 1billion (Rs 67 billion to property developers. Altico Capital, backed by global PE firms, had a loan book of Rs 48.70 billion as of December 31 last year.

However, Piramal Capital of Ajay Piramal group, is way ahead with assets of Rs 650 billion.

Housing finance companies and non-bank finance companies (NBFCs) are increasingly becoming major funding sources because banks have moderated their real estate (RE) lending growth, India Ratings and Research said in a recent report.

While the overall real estate loan book expanded at a compound annual growth rate (CAGR) of about 15 per cent over FY14-9MFY18, real estate-NBFC book has expanded at a CAGR of 60.9 per cent, albeit on a smaller base, it said. 

India Ratings estimates lending to the real estate market stands at Rs 5.2 trillion (as of December 2017). It expects NBFCs’ market share to reach 17.8 per cent in the formal RE funding market by FY20 from 13.7 per cent currently. 

Brookfield has $159 billion of assets under management globally, and has a real estate portfolio of 450 million square feet.

It has invested in private and public credit opportunities, deploying $13 billion of capital across its private equity, real estate, and infrastructure businesses, Brookfield said on its website.

BROOKFIELD IN INDIAN REALTY

• Brookfield has lent $450 mn to developers; looks to do $1bn (Rs 67 bn) in the next 2-3 years.
• Brookfield has asset based of about $6 bn  in realty, infrastructure in the country
• Brookfield has a commercial portfolio of 24 million sq ft, 
• It invested around Rs 8 billion in Bengaluru based property developer 
• Brookfield has $159 billion of AUM globally, and has a real estate portfolio of 450 million sq ft.