- By Region
Brookfield, the largest owner of office space in the US, is turning its focus to Europe as pressure builds on businesses and governments on the continent to sell assets in an effort to pay down debt.
Brookfield, in the process of raising a $3.5bn real estate fund, is preparing to buy one property business and one infrastructure business in Europe.
“We will use the two companies as platforms to go out and build up our business in Europe by buying up assets and putting capital into struggling companies,” said Bruce Flatt, Brookfield’s chief executive.
A push into Europe would represent a watershed moment for Brookfield. The continent accounts for 5 per cent of its $150bn assets under management, which span offices, shopping malls, toll roads and ports. The company has avoided the market in the past because of what it saw as low prospects for growth and overpriced assets.
“There are a large number of fantastic businesses in Europe that, through no fault of their own, now require capital to keep themselves going,” said Mr Flatt.
“At the government level, there is still a huge amount of deleveraging that needs to take place. Longer term, there is no doubt that governments will also have to take assets off their balance sheets and those companies that have cash are going to be in a very strong position.”
Traditionally, Brookfield has limited its activities on the continent to the London office market. It is in the process of building two skyscrapers in the City and owns more than 20 per cent of Canary Wharf in east London.
However, the company is expected to use much of the $3.5bn fund to invest in expanding its activities in Europe and is thought to be looking at Spanish companies as possible targets.
Cash-rich private equity and vulture funds are already circling Spanish property and infrastructure assets, many of which are held by the country’s struggling banks.
Mr Flatt declined to discuss specific deals but said one route could be for Brookfield to buy the overseas assets of debt-laden European businesses. Last October, Brookfield paid €216m to ACS, the Spanish infrastructure group, for its controlling stake in two Chilean toll roads.