Oaktree Capital Management has raised $3 billion for its third global real estate debt fund, Real Estate Debt Fund III (REDF III).
Oaktree said REDF III is 34% larger than its predecessor fund and the largest ever for its real estate debt strategy.
Oaktree’s real estate debt strategy seeks to achieve attractive risk-adjusted returns and current income by investing across a broad landscape of commercial and residential real estate debt opportunities.
Oaktree said this market segment is particularly compelling today given current real estate fundamentals, the desirability of real estate in an inflationary environment, and the predominately floating-rate nature of the instruments in which the team invests.
REDF III will invest globally in a wide range of opportunities, including commercial and residential first mortgages, commercial property mezzanine loans, real estate structured credit and real estate-related corporate debt.
As of December 31, 2021, the fund had deployed $1.6 billion, representing approximately 55% of its total capital, in investments concentrated in the U.S., Europe and Australia.
“This successful close is a testament to the strength of Oaktree’s real estate debt strategy and the global team we’ve built over the last decade,” said John Brady, Portfolio Manager and Head of the Global Real Estate group at Oaktree. “Investors around the world increasingly want exposure to real estate debt due to its potential to offer attractive yields and total returns with less-than-commensurate risk relative to traditional corporate debt. We’re delighted that our investors continue to appreciate Oaktree’s differentiated approach, sourcing prowess, and ability to add value in this space.”
“Oaktree’s breadth and depth of experience and the fund’s flexible mandate allow us to offer our limited partners an all-weather credit strategy. Our focus is on private loans and traded debt securities offering attractive relative value within the real estate industry that compare favorably with the rest of the broader credit landscape,” added Justin Guichard, Managing Director and Co-Portfolio Manager, Real Estate Debt and Structured Credit at Oaktree. “This ability to pivot to the most attractive opportunities available at any given time served us well as markets shifted in 2020 and 2021, and we believe it will continue to be a key driver of success going forward.”