Executives with Brookfield Asset Management see a further real estate turnaround, marked by more trades for "high-quality" properties.

The Toronto-based firm, with about US$1 trillion in assets under management across renewable power & transition, infrastructure, private equity, real estate, and credit, raised US$68 billion in the quarter.

Of that amount, real estate totaled US$1.1 billion, including additional capital for the fifth version of its opportunistic real estate flagship fund. The total fund size is now about US$9 billion, with more closings expected before year-end.

In a letter to shareholders, CEO Bruce Flatt and President Connor Teskey remarked that real estate markets continue to improve, with tightening credit spreads and the return of liquidity for the best properties.

"The opportunities for well-capitalized investors to acquire premium assets at attractive prices are significant, particularly where owners are either undercapitalized or have inappropriate capital structures in place," the pair said. This led to two large billion-dollar plus transactions of U.S. multifamily apartments and industrial properties at what we believe to be exceptional values. Most importantly, the need for those without capital is just beginning."

On a conference call with analysts, Teskey reiterated that Brookfield expects to see specific assets change hands but added transactions were opportunistic.

"High-quality, best-in-class assets continue to attract very robust bids and significant demand," said Teskey. "We will continue to play into that as we have in recent quarters."

Earlier this year, Brookfield bought a portfolio of troubled loans tied to over 2,000 apartments in San Francisco in a move that could make it one of the city's largest residential landlords.

In June, Brookfield Asset Management paid US$825 million to buy 83 industrial properties across eight states.

Brookfield Asset Management was formed in December 2022 when Toronto-based Brookfield Corp. spun out a 25% interest in its asset management business into the separately traded entity. Brookfield Corp. owns the other 75% of the asset management business and expects to report earnings Thursday.

For the period ended June 30, publicly traded Brookfield Asset's net income rose to US$124 million from US$109 million a year earlier.

"The global economy has made great strides towards a better balance of solid growth and modest inflation. Global central banks have begun cutting interest rates amidst declining price pressures and the normalization of very tight (job) markets. Growth is moving towards trend rates in major economies and will be underpinned by further reductions in short-term interest rates that are expected over the next year," said the pair in their letter to shareholders.

"Business sentiment remains positive and capital expenditures robust, despite elevated geopolitical uncertainty. Although equity markets have been somewhat more volatile in recent weeks, risk appetite and liquidity in capital markets are strong, supporting transaction activity in the segments in which we operate."

Nik Priebe, an analyst with CIBC World Markets, wrote in a note that Brookfield Asset Management's "capital-raising results" in the second quarter may imply a more active second half of 2024.

Teskey said monetization activity in real estate would be more asset-specific than broad-based.

"I would say that is quite representative of the opportunity we see on the investment side, where we are seeing tremendous opportunities to put capital to work, and on the real estate side, where there is still some caution in the sector."