Brookfield, Hillwood JV on $1B Acquisition Vehicle

With the U.S. industrial market improving, Brookfield Asset Management and Hillwood announced a joint venture that is expected to invest as much as $1 billion in industrial properties over the next three years.

By Gail Kalinoski, Contributing Editor

Image courtesy Flickr user kevin dooley

With the U.S. industrial market improving, Brookfield Asset Management and Hillwood announced a joint venture that is expected to invest as much as $1 billion in industrial properties over the next three years.

Backed by an equity commitment of $400 million, the joint venture will acquire, develop and manage industrial property, mainly large warehouses, across the United States. The companies said it was one of the more significant investments in industrial real estate since the U.S. recession began in 2008. The companies noted they have a wealth of combined experience and resources to make a significant impact on the market. Hillwood, a Dallas-based real estate investor and developer owned by Ross Perot Jr., will look for the properties.

“The partnership between Brookfield and Hillwood is not only the right fit, it’s happening at the right time,” Perot said. “Industrial development slowed during the downturn due to a lack of equity and debt. Given the liquidity and resources supporting our investment, our joint venture is well-positioned to benefit from renewed demand for industrial space which will increase as the economy continues to show signs of improvement.”

A year-end report by services firm Cushman & Wakefield Inc. noted that demand had “accelerated significantly” in 2011 at levels not seen since before the recession and was expected to continue this year. The national overall vacancy rate declined to 10 percent in 2011 from 10.8 percent the previous year, and leasing activity increased by 20.5 percent to 417.1 million square feet in 2011 from 345.8 million square feet leased in 2010. Cushman said it was the highest level of leasing activity seen in the U.S. industrial market since 2007. Many of the major markets in the study reported increased demand with leasing activity and absorption rates rising and overall vacancy rates declining. Several markets, particularly in Pennsylvania along the I-81/I-78 corridors and in Pittsburgh, were reporting the need for more development.

“As long-term, value-oriented real estate investors, we believe this is an excellent time to selectively build a portfolio of high-quality industrial properties, and we look forward to expanding our relationship with Hillwood,” said David Arthur, managing partner of Brookfield Asset Management.

Brookfield Asset Management, based in Toronto, is a global alternative asset manager focused on property, renewable power, infrastructure and private equity. It has approximately $150 billion of assets under management, including $83 billion in property assets in North and South America, Europe and Australia.

Hillwood is the top residential developer in the Dallas-Fort Worth area and ranked as one of the top commercial real estate investors and developers in the country. One of its biggest developments is AllianceTexas, a 17,000-acre, master-planned, mixed-use community that features industrial, office and retail space for nearly 300 companies. It is anchored by the multi-modal inland port known as the Alliance Global Logistics Hub. Hillwood has developed similar projects in California and Florida. It also has industrial properties in Pennsylvania, South Carolina, Georgia, and Mississippi.

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