A Global Real-Estate Giant Whispers 'We're Number One'

By Miriam Gottfried and Esther FungFeaturesDow Jones Newswires

Earlier this year, Brookfield Asset Management Inc. lost its No. 1 spot in an industry ranking of the world's biggest real-estate investors.

Behind the scenes, the Toronto company started pushing back.

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Brookfield, which manages $269 billion in assets across real estate, infrastructure, private equity and renewable energy investments, lobbied an industry group that creates the ranking to define it more clearly so that investors would know its infrastructure investments weren't being included, according to people familiar with the matter.

The jostling was an example of Brookfield's quiet efforts to build name recognition and burnish investor cred in an industry full of larger-than-life characters and swaggering deal makers.

Chief Executive Bruce Flatt, who himself could claim the title of least-famous real-estate billionaire, is sometimes frustrated the world doesn't know more about Brookfield, according to people who know him. But the last thing the understated Winnipeg native would do is come out and say so.

"I would say we're thrilled with our partnerships we have with our investors and the trust they put in us," Mr. Flatt said in an interview when asked whether Brookfield gets enough credit for its success.

Mr. Flatt, 52 years old, is known for making bets on sectors or regions that have fallen out of favor and riding them until the market recovers and their values soar.

"He's incredibly smart and doesn't have the herd mentality," said Jonathan Gray, head of real estate at Blackstone Group LP, which overtook Brookfield for the top spot in the ranking this year. "So he'll go to Brazil when no one likes Brazil. He'll buy distressed assets when things are beaten down."

Mr. Flatt's latest contrarian bet came on Monday, when one of its subsidiaries, Brookfield Property Partners, confirmed it made a $14.8 billion bid for the remaining 66% of mall real-estate investment trust GGP Inc. it doesn't already own.

The move was bold, at a time when malls are struggling and retailers are closing stores by the thousands across the U.S. as e-commerce gains a stronger grip over American consumers. Shares of GGP were trading near their 52-week low before The Wall Street Journal reported Brookfield's offer on Nov. 12.

Mr. Flatt said it would be easier for GGP to weather the changes occurring in the retail sector under Brookfield's leadership. Brookfield also sees value in GGP's land tracts, which could be developed into offices, residential buildings or used for other purposes, he said.

Brookfield Asset Management controls a sprawling portfolio, including listed subsidiaries such as Brookfield Property Partners, Brookfield Infrastructure Partners and Brookfield Renewable Partners and a variety of private funds and public securities portfolios across 30 countries.

Mr. Flatt, whose father was one of the co-founders of Investors Group, now a subsidiary of Canada's IGM Financial Inc., had a lawn-mowing business as a teenager and went on to study accounting. He started at Brookfield in 1989 and became a protégé of Brookfield's then-chief, Jack Cockwell.

Mr. Cockwell "saw the guy was bright, focused and had extraordinary personal discipline and decided that he needed to be mentored," said Denis Couture, who led communications at Brookfield until 2010 and spent a decade working with Mr. Flatt.

Mr. Flatt's success stems from the emphasis he places on establishing partnerships with institutions and having a long-term view, people who know him say. This patience is aided by the fact that Brookfield's top managers own a large portion of its stock. Unlike most asset managers which typically commit around 2% to 3% of the capital in a fund, Brookfield is also the largest investor in every fund it raises.

Mr. Flatt, who now splits his time between New York and London, is known for being thoughtful and methodical. But once he has a clear view on a business or property, he is decisive.

One of his most high-profile bets in recent years is in Brazil, which had fallen out of favor with the wider investment public because of concerns over the nation's political stability. Brookfield is constructing 4,200 kilometers (2,610 miles) of electricity transmission lines in Brazil, and completed the first 800 kilometers by the end of September. It aims to complete another 800 kilometers in 2018.

The dearth of foreign direct investment in Brazil, coupled with entrepreneurs and government entities needing capital, produced "phenomenal opportunities, and we took advantage of that," he said.

Brookfield said in its third-quarter letter to shareholders Nov. 9 it expects to double the size of its overall business if it achieves its plans over the next five years.

Mr. Couture, who now heads up public affairs for Ivanhoé Cambridge, the real-estate arm of the Canadian pension fund Caisse de dépôt et placement du Québec, recalled when the company met its long-term target of $30 billion in assets under management in 2005.

"I asked Bruce for a new target and suggested $50 billion. He said: 'How about $500 billion,'" Mr. Couture said. "Knowing Bruce, he'll get there."

--Craig Karmin contributed to this article.

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com and Esther Fung at esther.fung@wsj.com

(END) Dow Jones Newswires

November 17, 2017 12:15 ET (17:15 GMT)