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.
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.
1 Past 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.
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
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.
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