Oaktree launched the Real Estate Value-Add strategy in 2016 as a step-out of the Real Estate Opportunities strategy. It expands the reach of Oaktree’s real estate platform through investments that have the potential to provide stable income and attractive risk-adjusted returns, but do not have the requisite distress or total return profile to be a candidate for Oaktree’s Real Estate Opportunities funds. The Real Estate Value-Add strategy seeks to achieve superior risk-adjusted returns through investments in high-quality real estate assets with an emphasis on income and long-term growth.
This strategy targets commercial real estate assets, with a particular emphasis on office, multifamily, industrial, and retail properties. It also considers debt and other income-producing investments on a limited basis.
“We’ve grown Oaktree’s real estate business organically, developing successful step-outs of our opportunistic real estate business,” says John Brady, head Oaktree’s Real Estate Group. “The Real Estate Value-Add strategy positions us to capitalize on previously untapped investments with the goal of providing our clients with attractive current income and value-add upside potential.”
Consistent with Oaktree’s investment philosophy, the Real Estate Value-Add strategy emphasizes the importance of market inefficiency, consistency and controlling risk. The team utilizes its global platform’s existing infrastructure and relationships to acquire value-add real estate investments. The strategy mitigates downside risk by identifying price discounts relative to intrinsic value and replacement cost, diversifying positions by property type and geography, and conservatively managing leverage.