Oaktree Closes $3B Real Estate Debt Fund
The firm’s third and final fund brings in $3 billion, a 34% spike to its predecessor.
Oaktree Capital Management’s third global real estate debt fund was the firm’s largest ever, crushing its preceding fund by 34 percent.
This $3 billion fund seeks to achieve attractive risk-adjusted returns and current income by investing across a broad landscape of commercial and residential real estate debt opportunities.
This market segment is particularly compelling today given current real estate fundamentals, the desirability of real estate in an inflationary environment, and the predominately floating-rate nature of the instruments in which the team invests, the firm said in a release.
REDF III will invest globally in a wide range of opportunities, including commercial and residential first mortgages, commercial property mezzanine loans, real estate structured credit and real estate-related corporate debt.
As of Dec. 31, 2021, the fund had deployed $1.6 billion, representing approximately 55% of its total capital, in investments concentrated in the US, Europe and Australia.
“This successful close is a testament to the strength of Oaktree’s Real Estate Debt strategy and the global team we’ve built over the last decade,” said John Brady, Portfolio Manager and Head of the Global Real Estate group at Oaktree, in prepared remarks.
“Investors around the world increasingly want exposure to real estate debt due to its potential to offer attractive yields and total returns with less-than-commensurate risk relative to traditional corporate debt,” he said.
Fund’s Flexible Mandate a Boon
Added Justin Guichard, Managing Director and Co-Portfolio Manager, Real Estate Debt and Structured Credit at Oaktree, “The fund’s flexible mandate allows us to offer our limited partners an all-weather credit strategy. Our focus is on private loans and traded debt securities offering attractive relative value within the real estate industry that compare favorably with the rest of the broader credit landscape.
“This ability to pivot to the most attractive opportunities available at any given time served us well as markets shifted in 2020 and 2021, and we believe it will continue to be a key driver of success going forward.”