Oaktree Real Estate Income Trust

Company profile

Fiscal year end
Former names
Brookfield REIT OP GP LLC • Brookfield REIT Operating Partnership L.P. • Brookfield REIT Parent Holdings LLC • Brookfield REIT Parent TRS LLC • Brookfield REIT Finco GP LLC • Brookfield REIT Facility Holdings LLC • Brookfield REIT Logistics Holdings LLC • Dover Street Grand Avenue Partners TRS, LLC • Dover Street Grand Avenue Partners, LLC • Brookfield REIT Finco L.P. ...


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31 Dec 22
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Annual (USD) Dec 21 Dec 20 May 20 Dec 19
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Financial report summary

  • We have held our current investments for a short period of time and our stockholders will not have the opportunity to evaluate our future investments before we make them, which makes an investment in our common stock more speculative.
  • The Adviser manages our portfolio pursuant to very broad investment guidelines and generally is not required to seek the approval of our board of directors for each investment, financing or asset allocation decision made by it, which may result in our making riskier investments and which could adversely affect our results of operations and financial condition.
  • There is no public trading market for shares of our common stock; therefore, stockholders' ability to dispose of our shares will likely be limited to repurchase by us. If stockholders do sell their shares to us, they may receive less than the price they paid.
  • Repurchases through our share repurchase plan are limited. We may choose to repurchase fewer shares than have been requested to be repurchased, in our discretion at any time, and the amount of shares we may repurchase is subject to caps. Further, our board of directors may modify or suspend our share repurchase plan if it deems such action to be in our best interest and the best interest of our stockholders.
  • Economic events that may cause our stockholders to request that we repurchase their shares may materially adversely affect our cash flow and our results of operations and financial condition.
  • The amount and source of distributions we may make to our stockholders is uncertain, and we may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at any time in the future.
  • We may pay distributions and fund share repurchases from sources other than our cash flow from operations and we have no limits on the amounts we may pay from such sources.
  • Payments to the Adviser in respect of any common stock or Operating Partnership units it elects to receive in lieu of fees will dilute future cash available for distribution to our stockholders.
  • Purchases and repurchases of shares of our common stock may not be made based on the current NAV per share of our common stock.
  • Valuations and appraisals of our properties and real estate-related investments are estimates of fair value and may not necessarily correspond to realizable value.
  • Valuations of our portfolio may involve uncertainties and judgmental determinations.
  • Our NAV per share amounts may change materially if the appraised values of our properties materially change from prior appraisals or the actual operating results for a particular month differ from what we originally budgeted for that month.
  • It may be difficult to reflect, fully and accurately, material events that may impact our monthly NAV.
  • If we are unable to raise substantial funds, we will be limited in the number and type of investments we make, and the value of our shares of common stock will be more dependent on the performance of any of the specific assets we acquire.
  • We face risks associated with the deployment of our capital.
  • Our board of directors may, in the future, adopt certain measures under Maryland law without stockholder approval that may have the effect of making it less likely that a stockholder would receive a “control premium” for his or her shares.
  • Our charter permits our board of directors to authorize us to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third party from acquiring us.
  • Maryland law limits, in some cases, the ability of a third party to vote shares acquired in a “control share acquisition.”
  • Maryland law and our organizational documents limit our rights and the rights of our stockholders to recover claims against our directors and officers, which could reduce stockholders' and our recovery against them if they cause us to incur losses.
  • Maryland law limits our stockholders’ ability to amend our charter or dissolve us without the approval of our board of directors.
  • Your interest in us will be diluted if we issue additional shares.
  • Our UPREIT structure may result in potential conflicts of interest with the Operating Partnership or limited partners in the Operating Partnership whose interests may not be aligned with those of our stockholders.
  • Tax protection agreements could limit our ability to sell or otherwise dispose of property contributed to the Operating Partnership.
  • Tax protection agreements may require the Operating Partnership to maintain certain debt levels that otherwise would not be required to operate our business.
  • Cash payments to redeem Operating Partnership interests will reduce cash available for distribution to our stockholders or to honor their repurchase requests under our share repurchase program.
  • Our results of operations may be adversely affected if we are required to register as an investment company under the Investment Company Act.
  • Operational risks, including interruption of our information technology, communications systems or data services could disrupt our business, result in losses or limit our growth.
  • Our ability to significantly influence a company or an investment will expose us to additional risks of liability and may subject us to indemnification obligations.
  • Our investment activities subject us to the risks of becoming involved in litigation by third parties.
  • Our operating results will be affected by economic and regulatory changes that impact the real estate market in general.
  • Our success is dependent on general market and economic conditions.
  • Inflation may adversely affect our financial condition and results of operations.
  • Our business has been and is expected to continue to be adversely affected by the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus.
  • Changes in laws or regulations governing our operations, changes in the interpretation thereof or newly enacted laws or regulations and any failure by us to comply with these laws or regulations, could require changes to certain of our business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us or otherwise adversely affect our business.
  • Financial regulatory changes in the United States could adversely affect our business.
  • We may be subject to foreign currency risk and our risk management activities may adversely affect the performance of our operations.
  • We face risks relating to the jurisdictions of our operations.
  • Our portfolio may be concentrated in a limited number of industries, geographies or investments.
  • We may change our investment and operational policies without stockholder consent.
  • In our due diligence review of potential investments, we may rely on third-party consultants and advisors and representations made by sellers of potential portfolio properties, and we may not identify all relevant facts that may be necessary or helpful in evaluating potential investments.
  • Difficulty in redeploying the proceeds from our disposed or repaid investments may cause our financial performance and returns to investors to suffer.
  • Competition in acquiring properties may reduce our profitability and our results of operations.
  • We face risks associated with property acquisitions.
  • We have made and may continue to make joint venture investments, with both third parties and Other Brookfield Accounts. Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of our joint venture partners and disputes between us and our joint venture partners.
  • We may have difficulty selling our properties, which may limit our flexibility and ability to pay distributions.
  • The sale and disposition of real properties carry certain litigation risks at the property level that may reduce our profitability.
  • We rely on property managers to operate our properties and leasing agents to lease vacancies in our properties.
  • We may be unable to renew leases as leases expire.
  • Our properties will face significant competition.
  • Our properties may be leased at below-market rates under long-term leases.
  • We may experience material losses or damage related to our properties and such losses may not be covered by insurance.
  • We could become subject to liability for environmental violations, regardless of whether we caused such violations.
  • Our costs associated with complying with the Americans with Disabilities Act of 1990 (the “ADA”) may affect cash available for distribution.
  • The properties we acquire will be subject to property taxes that may increase in the future, which could adversely affect our cash flow.
  • Certain of our investments may be in the form of ground leases, which provide limited rights to the underlying property.
  • We could be negatively impacted by the condition of Fannie Mae or Freddie Mac and by changes in government support for multifamily housing.
  • Short-term leases associated with any multifamily or single family rental properties we acquire may expose us to the effects of declining market rent and could adversely impact our ability to make cash distributions to our stockholders.
  • Increased levels of unemployment could adversely affect the occupancy and rental rates of any multifamily and single family rental properties we acquire.
  • If any credit market disruptions or economic slowdowns occur, any investments in multifamily properties may face increased competition from single-family homes and condominiums for rent, which could limit our ability to retain residents, lease apartment units or increase or maintain rents.
  • Rent control and other changes in applicable laws, or noncompliance with applicable laws, could adversely affect our multifamily and single family rental properties.
  • The multifamily properties in which we invest must comply with the Fair Housing Amendment of 1988 (the "FHAA").
  • We may be adversely affected by trends in the office real estate industry.
  • Our logistics tenants may be adversely affected by a decline in manufacturing activity in the United States.
  • Certain of our properties may be special use or build-to-suit and may be difficult to sell or relet upon tenant defaults or lease terminations.
  • Our retail tenants will face competition from numerous retail channels.
  • Retail properties depend on anchor tenants to attract shoppers and could be adversely affected by the loss of a key anchor tenant.
  • Investments in real estate-related debt securities are subject to various risks, including creditor risks and early redemption features, which may materially adversely affect our results of operations and financial condition.
  • We may invest in mortgages, real estate loans, securities and other relatively illiquid investments.
  • We may face risks in connection with frequent trading in and high portfolio turnover of our real estate-related debt portfolio and our Liquidity Sleeve.
  • We may invest in distressed securities and some of our securities investments may become distressed, which securities would have a high risk of default and may be illiquid, and which may subject us to losses and other risks relating to bankruptcy proceedings.
  • Investments in subordinated debt carry greater risks than those associated with senior obligations.
  • Our debt investments face prepayment risk and interest rate fluctuations that may adversely affect our results of operations and financial condition.
  • Our performance may be impacted by the performance of institutions with which we do business.
  • Certain risks associated with CMBS may adversely affect our results of operations and financial condition.
  • Our obligations in connection with investments in bank loans and participations will be subject to unique risks.
  • The operating and financial risks of issuers and the underlying default risk across capital structures may adversely affect our results of operations and financial condition.
  • We may invest in high-yield securities which are generally subject to more risk than higher rated securities.
  • We may provide bridge financings, which involve numerous risks.
  • We may receive or purchase options on securities or to hedge securities, which involve numerous risks.
  • We may invest in structured products that may involve structural and legal risks.
  • We may invest in derivatives, which involve numerous risks.
  • We will be subject to the Dodd-Frank Act and other derivatives regulations.
  • Where we enter into derivatives contracts that are not centrally cleared through a CCP, we will become subject to counterparty risk.
  • We will face risks arising from cleared derivatives transactions.
  • Transactions involving uncleared OTC derivative instruments entail a greater risk of illiquidity.
  • We will face risks in connection with forward contracts.
  • We may enter into swap transactions, which involve a variety of significant risks.
  • Our investments in credit-linked securities subject us to credit and other risks.
  • We will be exposed to counterparty, settlement and local intermediary risks.
  • Repurchase transactions involve risks, and any warehouse facilities that we may obtain in the future may limit our ability to originate or acquire assets, and we may incur losses if the collateral is liquidated.
  • We expect that we will be operated pursuant to an exemption or exclusion from the registration requirements under the CFTC regulations.
  • Our reliance on management of real estate-related companies relating to our investments in the debt of such companies carries certain risks.
  • We may invest in equity of other REITs that invest in real estate debt as one of their core businesses and other real estate-related companies, which subjects us to certain risks including those risks associated with an investment in our own common stock.
  • We use mortgage indebtedness and other borrowings, which increases our business risks, could hinder our ability to make distributions and could decrease the value of our stock.
  • In certain cases, financings for our properties may be recourse to us.
  • If we draw on a line of credit to pay distributions, fund repurchases or for any other reason, our financial leverage ratio could increase beyond our target.
  • Increases in interest rates could increase the amount of our loan payments and adversely affect our ability to make distributions to our stockholders.
  • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur.
  • Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.
  • If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to make distributions to our stockholders.
  • Failure to hedge effectively against interest rate changes may materially adversely affect our results of operations and financial condition.
  • We may be adversely affected by the phasing out of the London Interbank Offered Rate ("LIBOR").
  • We depend on the Adviser to select our investments and otherwise conduct our business, and any material adverse change in its financial condition or our relationship with the Adviser could have a material adverse effect on our business and ability to achieve our investment objectives.
  • The Adviser will have broad discretion in selecting the properties we will invest in.
  • The termination or replacement of the Adviser or the Sub-Adviser could trigger a repayment event under our mortgage loans for some of our properties and the credit agreements governing any line of credit we obtain.
  • The Adviser’s inability to retain the services of key real estate professionals could hurt our performance.
  • The Adviser has engaged the Sub-Adviser to select and manage our liquid investments and to manage certain of our real estate properties and real estate-related debt investments. The Adviser relies on the performance of the Sub-Adviser in implementing the liquid investments portion of our investment strategy and the management of the real estate properties and real estate-related debt investments for which it is responsible.
  • The success of our Offering is dependent, in part, on the ability of the Dealer Manager to retain key employees and to successfully build and maintain a network of licensed broker-dealers.
  • The fees we pay in connection with our Offering and the agreements entered into with Brookfield, Oaktree and their respective affiliates were not determined on an arm’s-length basis and therefore may not be on the same terms we could achieve from a third party.
  • Various potential and actual conflicts of interest will arise, and these conflicts may not be identified or resolved in a manner favorable to us.
  • The Adviser’s management and performance fees may not create proper incentives or may induce the Adviser and its affiliates to make certain investments, including speculative investments, that increase the risk of our real estate portfolio.
  • Each of the Adviser and the Sub-Adviser will face a conflict of interest because the fees they will receive for services performed are based in part on our NAV, which the Adviser and the Sub-Adviser are ultimately responsible for determining.
  • Certain Other Brookfield Accounts have similar or overlapping investment objectives and guidelines, and we will not be allocated certain opportunities and may be allocated only opportunities with lower relative returns.
  • Brookfield personnel will work on other projects and conflicts may arise in the allocation of personnel between us and other projects.
  • Brookfield or Oaktree may acquire confidential or material non-public information or be restricted from initiating transactions in certain securities, as a result of which we may not be able to initiate a transaction or sell an investment that may otherwise have been initiated or sold.
  • We may purchase assets from or sell assets to the Adviser, the Sub-Adviser and their respective affiliates, and such transactions may cause conflicts of interest.
  • We may make investments at different times or on different terms than Other Brookfield Accounts, ultimately realizing different investment returns than such Other Brookfield Accounts.
  • The personnel of the Adviser and the Sub-Adviser may trade in securities for their own accounts, subject to restrictions applicable to Brookfield and Oaktree personnel, respectively.
  • Brookfield’s or Oaktree's existing relationships may influence the Adviser’s or the Sub-Adviser's decision-making and the Adviser or Sub-Adviser may take the existence and development of such relationships into consideration in managing us and our investments.
  • The Adviser and the Sub-Adviser may face conflicts of interest in choosing our service providers and financing sources, and certain service providers may provide services to the Adviser, Brookfield, Other Brookfield Accounts, the Sub-Adviser, Oaktree or Other Oaktree Accounts on more favorable terms than those payable by us.
  • We may co-invest with Brookfield affiliates in real estate-related investments and such investments may be in different parts of the capital structure of an issuer and may otherwise involve conflicts of interest.
  • We have entered into and may continue to enter into joint ventures and other shared assets which will involve risks and conflicts of interests.
  • Brookfield, including the Adviser, may face conflicts of interest associated with the Brookfield Investor’s investments in us and the related share repurchase arrangement.
  • There may be conflicts of interest related to our uncommitted line of credit with an affiliate of Brookfield.
  • We expect to have a diverse stockholder group and the interests of our stockholders may conflict with one another and may conflict with the interests of investors in other vehicles that we co-invest with.
  • Our board of directors has adopted resolutions that renounce our interest or expectancy with respect to certain business opportunities and competitive activities.
  • Disputes between Brookfield and our joint venture partners who have pre-existing investments with Brookfield may affect our investments relating thereto.
  • We may be subject to additional potential conflicts of interests with portfolio companies of Brookfield and Other Brookfield Accounts, as well as affiliates of Oaktree.
  • We may be subject to additional potential conflicts of interests as a consequence of Brookfield’s status as a public company.
  • We are a party to the Option Investments Purchase Agreement with Oaktree.
  • If we do not maintain our qualification as a REIT, we will face serious tax consequences that could substantially reduce the funds available to satisfy our obligations, to implement our business strategy and to make distributions to our stockholders for each of the years involved.
  • To maintain our REIT status, we may have to borrow funds on a short-term basis during unfavorable market conditions.
  • Compliance with REIT requirements may cause us to forego otherwise attractive opportunities, which may hinder or delay our ability to meet our investment objectives and reduce our overall return.
  • Compliance with REIT requirements may force us to liquidate or restructure otherwise attractive investments.
  • Our charter does not permit any person or group to own more than 9.9% of our outstanding common stock or of our outstanding stock of all classes or series, and attempts to acquire our common stock or our stock of all other classes or series in excess of these 9.9% limits would not be effective without an exemption from these limits by our board of directors.
  • Non-U.S. holders may be required to file U.S. federal income tax returns and pay U.S. federal income tax upon their receipt of certain distributions from us or upon their disposition of shares of our common stock.
  • We may incur tax liabilities that would reduce our cash available for distribution to our stockholders.
  • Our board of directors is authorized to revoke our REIT election without stockholder approval, which may cause adverse consequences to our stockholders.
  • Stockholders may have current tax liability on distributions they elect to reinvest in our common stock.
  • Generally, ordinary dividends payable by REITs do not qualify for reduced U.S. federal income tax rates.
  • We may be subject to adverse legislative or regulatory tax changes.
  • The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
  • Investments outside the United States may subject us to additional taxes and could present additional complications to our ability to satisfy the REIT qualification requirements.
  • If the Operating Partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.
  • Restrictions on the deduction of all of our interest expense could prevent us from satisfying the REIT distribution requirements and avoiding the incurrence of income or excise taxes.
  • Our taxable REIT subsidiaries are subject to special rules that may result in increased taxes.
  • Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
  • We may choose to pay dividends in a combination of cash and our own common stock, in which case stockholders may be required to pay income taxes in excess of the cash dividends they receive.
  • The “taxable mortgage pool” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations.
  • If the leases of our properties are not respected as true leases for U.S. federal income tax purposes, we may fail to qualify as a REIT.
  • Sales of our properties at gains are potentially subject to the prohibited transaction tax, which could reduce the return on a stockholder’s investment.
  • There may be tax consequences to any modifications to our borrowings, our hedging transactions and other contracts to replace references to LIBOR.
  • Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.
  • If our assets at any time are deemed to constitute “plan assets” under ERISA, that may lead to the rescission of certain transactions, tax or fiduciary liability and our being held in violation of certain ERISA and Code requirements.
  • Certain properties may require permits or licenses.
  • We will face legal risks when making investments.
  • We will face risks associated with hedging transactions.
Management Discussion
  • •Year-to-date total returns through June 30, 2022, excluding upfront selling commissions, of 12.64% for Class S shares, 13.49% for Class I shares and 0.57% for Class D shares.(1) Year-to-date returns for Class D shares are calculated from June 1, 2022, the date the first Class D shares were issued. Total return is calculated as the percent change in the NAV per share from the beginning of the applicable period, plus the amount of any net distributions per share declared in the period.
  • •Raised $245.8 million of gross proceeds from the sale of our common stock during the three months ended June 30, 2022.
  • •In June 2022, declared net distributions per share of $0.0505 for Class S shares, $0.0598 for Class I shares and $0.0570 for Class D shares, resulting in annualized distribution rates of 4.40% for Class S shares, 5.18% for Class I shares and 5.00% for Class D shares as of June 30, 2022.(1)

Content analysis

H.S. junior Avg
New words: commonly, eighteen, factor, mandatory, nil, settlement, unaffiliated
Removed: acquiring, clarify, distributor, driven, hierarchal, waive