Benefits of Private Real Estate

Why Private Real Estate

With a market size of $17 trillion¹, commercial real estate offers an abundance of investment opportunities. Oaktree REIT will seek to optimize risk-adjusted returns by pursuing a flexible mandate, pivoting between geographies, product types and investment categories based on the opportunity set.

¹As of December 31, 2019
Source: Green Street Advisors, Federal Reserve Bank

CONTRIBUTING TO A BROADER PORTFOLIO

Private real estate has historically displayed a low correlation to stocks and bonds, while generating strong income. With Oaktree REIT, eligible investors will have access to institutional-quality private real estate, which historically has had lower volatility than other investment opportunities, often with stronger total returns¹.

As of December 31, 2019
Source: Bloomberg
Note: Represents correlation of annualized, quarterly returns of the last 10 years.

¹Past performance does not guarantee future results. An investment in Oaktree REIT is not a direct investment in real estate, and has material differences from a direct investment in real estate, including those related to fees and expenses, liquidity and tax treatment. Oaktree REIT’s share price is subject to less volatility because its per share NAV is based on the value of real estate assets it owns and is not subject to market pricing forces as is the price of public equities. Although Oaktree REIT’s share price is subject to less volatility, the value of real estate may fluctuate and may be worth less than was initially paid for it. Oaktree REIT shares are significantly less liquid than public equities, and are not immune to fluctuations. The indices presented represent investments that have material differences from an investment in a non-traded REIT, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety guarantees or insurance, fees and expenses, liquidity and tax treatment. See footnote 2 below for a description of each index.

² “Private Real Estate” is represented by the NCREIF Property Index (the “NPI”) on the basis that the NPI is the broadest measure of private real estate index returns. The NPI is published by the National Council of Real Estate Investment Fiduciaries and is a quarterly, composite total return (based on appraisal values) for private commercial real estate properties held for investment purposes including fund expenses but excluding leverage and management and advisory fees. The NPI excludes leverage and therefore is less volatile than real estate vehicles such as ours that employ leverage. All properties in the NPI have been acquired, at least in part, on behalf of tax-exempt institutional investors and held in a fiduciary environment. The Standard & Poor’s 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. Equities are represented by the total return, including dividends of the S&P 500 Index, and are subject to market risk. “Corporate Bonds” is represented by the Barclays US Aggregate Bond Index and is subject to credit risk. “Hedge Funds” is represented by the Dow Jones Credit Suisse (DJCS) Hedge Fund Index, an asset-weighted benchmark that measures hedge fund performance. The S&P 500 Index and the Barclays US Aggregate Bond Index are meant to illustrate general market performance; it is not possible to invest directly in an index. An investment in our shares is different from a direct investment in the commercial real estate properties represented by the NPI or private real estate.

TARGETING HIGH-GROWTH, NON-GATEWAY MARKETS

Today, we target high-growth, non-gateway markets that offer attractive income (high capitalization rates) and have limited oncoming new supply. These are markets where Oaktree has longstanding relationships, which help source proprietary opportunities. Since 2008, we have deployed over $6 billion of equity in commercial properties in high-growth, non-gateway markets. Gateway markets refer to the top six metropolitan areas in the United States: Boston, Los Angeles, New York, San Francisco, Washington D.C. and Chicago.

Total equity deployed: $6.1 billion

REGION	CITIES
West	Denver Las Vegas Phoenix Salt Lake City Seattle
Southwest	Austin Dallas Houston Oklahoma City San Antonio
Southeast	Atlanta Charlotte Jacksonville Miami/Ft. Lauderdale Nashville Orlando Raleigh

As of December 31, 2019
Source: U.S. Census Bureau estimates as of July 1, 2016
Note: Map presents the aggregate gross invested capital in Real Estate-led commercial equity transactions across all Oaktree-managed funds from January 1, 2008 through December 31, 2019 and includes $78 million in equity deployed from real estate funds in non Real Estate-led transactions. Hawaii and other market exposures outside of the 50 highest population U.S. markets are not shown in the map.

LITERATURE

SEE ALL LITERATURE

Brochure

Oaktree REIT Presentation

Property Book

Intro to Oaktree

SEC Filings
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DISCLOSURES

SUMMARY OF RISK FACTORS

Oaktree Real Estate Income Trust, Inc. (“Oaktree REIT”) is a non-traded REIT that seeks to invest in a diversified portfolio of income-producing real estate and real estate-related debt investments; generate an attractive, stable level of current income for regular distributions to our stockholders; and invest in assets with long-term growth potential to achieve attractive risk-adjusted total returns, with an emphasis on downside protection. This investment involves a high degree of risk. These securities should only be purchased if you can afford to lose your complete investment. Please read the prospectus for a description of the risks associated with an investment in Oaktree REIT. These risks include but are not limited to the following:

Oaktree REIT has no prior operating history and we cannot assure you that we will achieve our investment objectives.
As a “blind pool” offering, you will not have an opportunity to evaluate our investments before we make them.
We do not intend to list our shares of common stock for trading on an exchange or other trading market. The only likely way to dispose of your shares will be by repurchases from us since there is no public trading market for shares of our common stock. Through our share repurchase plan, stockholders may request that we repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the requested shares in any particular month in our discretion. Repurchases will be subject to available liquidity and other significant restrictions and our board of directors may modify, suspend or terminate our share repurchase plan if deemed to be in our best interest and the best interest of our stockholders. Our shares should be considered as having limited to no liquidity.
Distributions may be funded by sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings, return of capital or offering proceeds, although we cannot guarantee that we will make distributions. We believe that the likelihood that we pay distributions from sources other than cash flow from operations will be higher in the early stages of the offering.
After the escrow period, the purchase and repurchase price for shares of our common stock will generally be based on the prior month’s net asset value (“NAV”) and not on any public trading market. While there will be independent annual appraisals of our properties, the properties’ appraisal is inherently subjective, and our NAV may not accurately reflect the actual price at which our assets could be liquidated on any given day. We may offer shares at a price that we believe more appropriately reflects the NAV per share of such common stock rather than the prior month’s NAV per share, including updates to a previously disclosed offering price, in cases where we believe there has been a material change (positive or negative) to our NAV per share since the end of the prior month. Each class of shares may have a different NAV per share.
We have no employees and are dependent on Oaktree Fund Advisors, LLC (the “Advisor”) to conduct our operations. Oaktree will face conflicts of interest as a result of, among other things, the allocation of investment opportunities among us and other real estate accounts, the allocation of time of its investment professionals and the substantial fees that we will pay to the Advisor.
As a “best efforts” offering, our ability to achieve our investment objectives could be adversely affected if we are not able to raise a substantial amount of capital in the near term.
Principal and interest payments on borrowings will reduce funds available for distribution or investment.
There are limits on the ownership and transferability of our shares.
We do not own the Oaktree name, but we are permitted to use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of Oaktree Capital Management, L.P. (together with its affiliates, “Oaktree”). Use of the name by other parties or the termination of our trademark license agreement may harm our business.
An investment in Oaktree REIT is not an investment in fixed income. Fixed income has material differences from an investment in a non-traded REIT, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety, guarantees or insurance, fees and expenses, liquidity and tax treatment.
We intend to qualify as a REIT for U.S. federal income tax purposes beginning with December 31of the first taxable year in which proceeds from our initial offering are released from escrow. However, if we fail to qualify as a REIT and no relief provisions apply, our NAV and cash available for distribution to our stockholders could materially decrease as a result of becoming subject to corporate income taxes.
Subject to maintaining our REIT qualification and the limitations in our charter, we may elect to leverage our investments on a recourse or non-recourse basis or otherwise engage in certain investment activities that involve the use of leverage, which may increase losses.
Investing in commercial real estate involves certain risks, including but not limited to: bankruptcy, financial difficulty or lease default of a major tenant; interest rate fluctuations and lack of availability of financing; adverse national real estate trends, including increasing vacancy rates; and changes in supply and demand fundamentals.
Oaktree REIT will directly own private real estate. Individual investors will own shares of common stock in Oaktree REIT as opposed to direct ownership of private, non-traded real estate.
Numerical data is approximate and as of December 31, 2018 (unless otherwise noted). The words “we”, “us”, and “our” refer to Oaktree Real Estate Income Trust, Inc., unless the context requires otherwise. Numerical data relating to Oaktree includes Oaktree Real Estate-led activities in public and private portfolio companies (unless otherwise noted).

IMPORTANT DISCLOSURE ABOUT OTHER OAKTREE REAL ESTATE FUNDS

This sales material includes information related to prior investments the Oaktree Real Estate group has made, in which the Oaktree REIT will not have any interest. While the investment programs of other Oaktree real estate accounts and our investment strategy each involve real estate-related investments and overlapping personnel, each of these accounts and strategies has distinct investment activities. Oaktree’s experience in managing other Oaktree real estate accounts and other Oaktree accounts is not necessarily applicable to us. There can be no assurance that we will be able to successfully identify, make and realize any particular investment or generate returns for our investors (or that such returns will be commensurate with the risks associated with an investment in us).

Oaktree or its affiliates own or have invested in the properties depicted on this website. By investing in Oaktree REIT, investors will not have an interest in these properties.

FORWARD-LOOKING STATEMENT DISCLOSURE

Statements contained in this sales material that are not historical facts are based on our current expectations, estimates, projections, opinions, and/or beliefs. Such statements are not facts and involve known and unknown risks, uncertainties, and other factors. Prospective investors should not rely on these statements as if they were fact. Certain information contained in this sales material constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “target,” “estimate,” “intend,” “continue,” “forecast,” or “believe” or the negatives thereof or other variations thereon or other comparable terminology. Due to various risks and uncertainties, including those described in our prospectus, actual events or results or our actual performance may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to future performance or such forward-looking statements. In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.

You should carefully review the “Risk Factors” section of our prospectus for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This sales material must be read in conjunction with our prospectus in order to fully understand all the implications and risks of the offering of securities to which it relates. This sales material is neither an offer to sell nor a solicitation of an offer to buy securities. An offering is made only by the prospectus.

Neither the U.S. Securities and Exchange Commission, the Attorney General of the State of New York nor any other state securities regulator has approved or disapproved of these securities or determined if the prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

BENEFITS OF PRIVATE REAL ESTATE