Brookfield REIT Swings to Profit on Unconsolidated Entity Gains

TL;DR

**Brookfield REIT is back in the black, but watch those new loan and securities investments for future volatility.**

AI Summary

Brookfield Real Estate Income Trust Inc. reported a significant turnaround, moving from a net loss of $10.656 million in the first six months of 2024 to a net income of $2.467 million for the six months ended June 30, 2025. This improvement was primarily driven by a substantial increase in gain from unconsolidated entities, which surged from $3.724 million in H1 2024 to $13.641 million in H1 2025. Total revenues also saw a modest increase, reaching $71.757 million for H1 2025, up from $68.739 million in H1 2024, with rental revenues contributing $65.216 million. The company's total assets grew to $1.997 billion as of June 30, 2025, from $1.821 billion at December 31, 2024, largely due to a significant increase in investments in real estate-related loans and securities, which rose from $71.505 million to $216.280 million. Stockholders' equity also increased substantially to $460.633 million from $323.226 million over the same period. Cash and cash equivalents increased to $25.397 million from $13.763 million. The company also launched a third public offering of up to $7.5 billion in shares of common stock on July 2, 2025, and raised approximately $49.2 million from its DST Program as of June 30, 2025.

Why It Matters

This turnaround to profitability is a critical signal for investors, indicating improved operational efficiency and potentially stronger asset performance, especially within its unconsolidated entities. The significant increase in investments in real estate-related loans and securities suggests a strategic shift or expansion, which could diversify revenue streams but also introduce new risk exposures. For employees and customers, a healthier financial position generally means greater stability and potential for growth. In the competitive real estate investment trust market, Brookfield REIT's ability to generate positive net income and attract substantial capital through its public offerings and DST Program positions it more favorably against peers, particularly given the challenging interest rate environment.

Risk Assessment

Risk Level: medium — While Brookfield REIT achieved a net income of $2.467 million for H1 2025, a significant portion of this came from 'Gain from unconsolidated entities, net' which increased by $9.917 million. The company also saw a substantial increase in 'Investments in real estate-related loans and securities, net' from $71.505 million to $216.280 million, representing a 202% increase, which could introduce higher credit and market risks. Furthermore, the company's 'Accumulated deficit and cumulative distributions' increased from $(296.692) million to $(318.846) million, indicating ongoing historical losses.

Analyst Insight

Investors should closely monitor the performance of Brookfield REIT's unconsolidated entities and the quality of its rapidly expanding real estate-related loan and securities portfolio. While the return to profitability is positive, the reliance on gains from unconsolidated entities and increased exposure to debt investments warrant a cautious approach. Consider the long-term sustainability of these gains and the potential impact of rising interest rates on its debt holdings.

Financial Highlights

debt To Equity

2.44

revenue

$71.757M

operating Margin

N/A

total Assets

$1.997B

total Debt

$1.183B

net Income

$2.467M

eps

N/A

gross Margin

N/A

cash Position

$25.397M

revenue Growth

+4.4%

Revenue Breakdown

Key Numbers

• $2.467M — Net Income (For six months ended June 30, 2025, a significant improvement from a $10.656M loss in H1 2024.)
• $13.641M — Gain from unconsolidated entities (For six months ended June 30, 2025, up from $3.724M in H1 2024, a key driver of profitability.)
• $1.997B — Total Assets (As of June 30, 2025, an increase from $1.821B at December 31, 2024.)
• $216.280M — Investments in real estate-related loans and securities, net (As of June 30, 2025, a 202% increase from $71.505M at December 31, 2024.)
• $460.633M — Total Stockholders' Equity (As of June 30, 2025, up from $323.226M at December 31, 2024.)
• $71.757M — Total Revenues (For six months ended June 30, 2025, a slight increase from $68.739M in H1 2024.)
• $7.5B — Third Public Offering Amount (Launched July 2, 2025, indicating significant capital raising ambition.)
• $49.2M — DST Program Proceeds (Aggregate gross proceeds as of June 30, 2025, from private placement offerings.)
• $318.846M — Accumulated Deficit (As of June 30, 2025, an increase from $296.692M at December 31, 2024, indicating historical losses.)
• $25.397M — Cash and cash equivalents (As of June 30, 2025, an increase from $13.763M at December 31, 2024.)

Key Players & Entities

• BROOKFIELD REAL ESTATE INCOME TRUST INC. (company) — Registrant and REIT
• Brookfield REIT Adviser LLC (company) — External manager of Brookfield REIT
• Oaktree Fund Advisors, LLC (company) — Sub-Adviser for liquid assets
• Brookfield Asset Management Ltd. (company) — Affiliate of the Adviser and majority stake holder in Oaktree
• $2.467 million (dollar_amount) — Net income for the six months ended June 30, 2025
• $10.656 million (dollar_amount) — Net loss for the six months ended June 30, 2024
• $1.997 billion (dollar_amount) — Total Assets as of June 30, 2025
• $216.280 million (dollar_amount) — Investments in real estate-related loans and securities, net, as of June 30, 2025
• $7.5 billion (dollar_amount) — Maximum offering amount for the third public offering
• $49.2 million (dollar_amount) — Aggregate gross proceeds from DST Program as of June 30, 2025

FAQ

Risk Factors

• Reliance on Debt Financing [high — financial]: The company has substantial mortgage loans and a secured credit facility totaling $1,082,987,000 as of June 30, 2025. This high leverage exposes the company to interest rate fluctuations and refinancing risks.
• Real Estate Market Volatility [high — market]: The company's primary investments are in real estate and real estate-related assets. Downturns in the real estate market, including potential declines in property values and rental income, could negatively impact the company's financial performance.
• External Management Structure [medium — operational]: The company is externally managed by Brookfield REIT Adviser LLC, an affiliate of Brookfield Asset Management. Any disputes or changes in the relationship with the Adviser or Sub-Adviser (Oaktree) could disrupt operations.
• Accumulated Deficit [medium — financial]: As of June 30, 2025, the company has an accumulated deficit of $318.846 million, an increase from $296.692 million at December 31, 2024. This indicates a history of net losses, although current period net income has improved.
• Interest Rate Sensitivity [medium — market]: As a REIT, the company's performance is sensitive to interest rate changes. Rising interest rates can increase borrowing costs and potentially decrease property valuations, impacting profitability and the cost of capital.
• Significant Increase in Real Estate Loans and Securities [medium — financial]: Investments in real estate-related loans and securities surged by 202% to $216.280 million as of June 30, 2025, from $71.505 million at December 31, 2024. This rapid expansion into new asset classes carries inherent risks.
• REIT Qualification Requirements [medium — regulatory]: The company has elected to be taxed as a REIT. Failure to maintain REIT status by meeting specific income, asset, and distribution requirements could result in significant tax liabilities.
• Redeemable Non-Controlling Interests [low — financial]: The company has $299.373 million in redeemable non-controlling interests as of June 30, 2025. These interests may require significant cash outflows if redemption demands are high.

Industry Context

Brookfield Real Estate Income Trust Inc. operates within the diversified real estate investment trust sector, which is characterized by its reliance on rental income, property appreciation, and debt financing. The industry is sensitive to interest rate movements, economic cycles, and real estate market conditions. REITs are increasingly exploring various real estate-related debt and securities to diversify income streams and enhance returns.

Regulatory Implications

As a REIT, Brookfield REIT must adhere to strict IRS regulations regarding income sources, asset composition, and dividend distributions to maintain its tax-advantaged status. Changes in tax laws or failure to comply could result in significant tax liabilities and impact its operational structure.

What Investors Should Do

1. Monitor the performance of the expanded 'Investments in real estate-related loans and securities' portfolio, given its rapid growth and potential for increased volatility.
2. Analyze the impact of the ongoing third public offering ($7.5 billion) on dilution and future capital deployment strategies.
3. Assess the company's ability to manage its significant debt load ($1.083 billion in mortgage loans and credit facility) in a rising interest rate environment.
4. Evaluate the sustainability of the improved net income, particularly the reliance on gains from unconsolidated entities, and compare it to core rental revenue performance.
5. Review the company's strategy for managing redeemable non-controlling interests ($299.373 million) to understand potential future cash outflows.

Key Dates

• 2025-07-02: Commenced third public offering — Indicates a strong ambition for capital raising, seeking up to $7.5 billion to fuel growth and investments.
• 2025-06-30: End of reporting period for H1 2025 results — Shows a significant turnaround to net income of $2.467M from a net loss in H1 2024, driven by gains from unconsolidated entities.
• 2025-06-30: Total Assets reached $1.997B — Represents substantial growth from $1.821B at year-end 2024, largely due to increased investments in real estate-related loans and securities.
• 2025-06-30: Total Stockholders' Equity reached $460.633M — Significant increase from $323.226M at year-end 2024, reflecting capital raises and improved financial position.
• 2024-12-31: Previous reporting period end — Provides a baseline for comparison, showing a net loss of $10.656M for H1 2024 and total assets of $1.821B.
• 2017-07-27: Company formation — Marks the inception of Brookfield Real Estate Income Trust Inc.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. REITs are required to distribute at least 90% of their taxable income to shareholders annually. (Brookfield REIT has elected to be taxed as a REIT, impacting its tax obligations and investment strategy.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income. It represents the total historical losses since the company's inception. (Indicates the company's historical profitability, showing a deficit of $318.846M as of June 30, 2025.)

Unconsolidated Entities

Investments in other companies where the investor has significant influence but does not have control. These are typically accounted for using the equity method. (Gains from these entities ($13.641M in H1 2025) were a primary driver of the company's improved net income.)

Distribution Reinvestment Plan (DRIP)

A plan that allows investors to automatically reinvest their cash dividends or distributions into additional shares of the same company's stock. (The third public offering includes shares available through the company's DRIP, suggesting a mechanism for ongoing shareholder participation.)

DST Program

Delaware Statutory Trust Program. Often used in real estate investment, particularly for 1031 exchanges, allowing for the deferral of capital gains taxes. (The company raised $49.2M from its DST Program, indicating a strategy to attract investors seeking tax advantages.)

Non-controlling interests

The portion of equity in a subsidiary that is not attributable to the parent company. Redeemable non-controlling interests can be repurchased by the company. (The company has $299.373M in redeemable non-controlling interests, which could impact future cash flows.)

Additional paid-in capital

The amount of capital shareholders have paid to the company for stock in excess of its par value. It reflects capital raised from stock issuance. (Increased significantly to $778.855M from $619.431M, reflecting substantial capital raised through stock offerings.)

Secured credit facility

A type of loan that is backed by specific collateral. If the borrower defaults, the lender can seize the collateral. (The company has a significant secured credit facility as part of its $1,082,987,000 in mortgage loans and secured credit facility.)

Year-Over-Year Comparison

Compared to the prior period (December 31, 2024), Brookfield Real Estate Income Trust Inc. has demonstrated a significant financial turnaround, moving from a net loss to net income in the first six months of 2025. Total assets have grown by $175.909 million to $1.997 billion, primarily driven by a substantial increase in real estate-related loans and securities. Stockholders' equity also saw a robust increase of $137.407 million. While total revenues saw a modest increase, the key driver of profitability improvement was a significant surge in gains from unconsolidated entities.

Key Financial Figures

• $0.01 — g: 31,413,928 Class I shares, par value $0.01 per share, 26,025,663 Class S shares, p

Filing Documents

• oak-20250630.htm (10-Q) — 2697KB
• ex-101_asof6302025.htm (EX-10.1) — 267KB
• ex-311_asof06302025.htm (EX-31.1) — 10KB
• ex-312_asof06302025.htm (EX-31.2) — 10KB
• ex-321_asof06302025.htm (EX-32.1) — 7KB
• ex-322_asof06302025.htm (EX-32.2) — 7KB
• oak-20250630_g1.jpg (GRAPHIC) — 31KB
• 0001713407-25-000089.txt ( ) — 14001KB
• oak-20250630.xsd (EX-101.SCH) — 89KB
• oak-20250630_cal.xml (EX-101.CAL) — 98KB
• oak-20250630_def.xml (EX-101.DEF) — 496KB
• oak-20250630_lab.xml (EX-101.LAB) — 833KB
• oak-20250630_pre.xml (EX-101.PRE) — 706KB
• oak-20250630_htm.xml (XML) — 2695KB

FINANCIAL STATEMENTS (Unaudited)

FINANCIAL STATEMENTS (Unaudited) 1 Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 1 Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 2 Consolidated Statements of Changes in Stockholders ' Equity for the three and six months ended June 30, 2025 and 2024 3 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 5

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 39 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 56 PART II. OTHER INFORMATION 57 ITEM 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 57 ITEM 1A.

RISK FACTORS

RISK FACTORS 57 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 57 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 59 ITEM 4. MINE SAFETY DISCLOSURES 59 ITEM 5. OTHER INFORMATION 59 ITEM 6. EXHIBITS 60

SIGNATURES

SIGNATURES 61 WEBSITE DISCLOSURE Investors and others should note that we use our website, www.BrookfieldREIT.com , to announce material information to investors and the marketplace. While not all of the information that we post on our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on our website. Information contained on, or available through, our website is not incorporated by reference into this document. Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Brookfield Real Estate Income Trust Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data) June 30, 2025 December 31, 2024 Assets Investments in real estate, net $ 1,571,764 $ 1,592,802 Investments in real estate-related loans and securities, net 216,280 71,505 Investments in unconsolidated entities 101,284 81,566 Intangible assets, net 33,369 35,008 Cash and cash equivalents 25,397 13,763 Restricted cash 11,816 10,544 Accounts and other receivables, net 10,840 9,401 Other assets 26,422 6,674 Total Assets $ 1,997,172 $ 1,821,263 Liabilities and Equity Mortgage loans and secured credit facility, net $ 1,082,987 $ 1,061,366 Affiliate line of credit — 12,790 Due to affiliates 31,398 32,883 Intangible liabilities, net 24,111 24,783 Accounts payable, accrued expenses and other liabilities 43,634 42,732 Subscriptions received in advance 931 1,204 Total Liabilities 1,183,061 1,175,758 Commitments and contingencies — — Redeemable non-controlling interests 299,373 302,743 Stockholders' Equity Preferred stock, $ 0.01 par value per share, 50,000 shares authorized; no shares issued nor outstanding at June 30, 2025 and December 31, 2024, respectively — — Common stock - Class S shares, $ 0.01 par value per share, 225,000 shares authorized; 26,233 and 27,817 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 262 278 Common stock - Class I shares, 0.01 par value per share, 250,000 shares authorized; 30,920 and 14,215 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 309 142 Common stock - Class T shares, 0.01 par value per share, 225,000 shares authorized; 15 and no shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively — — Common stock - Class D shares, 0.01 par value per share, 100,000 shares authorized; 104 and 127 shares issued and outstanding as of June 30, 2025 and December 31, 2024

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 1. Organization and Business Purpose Brookfield Real Estate Income Trust Inc. ("Brookfield REIT" or the "Company") was formed on July 27, 2017 as a Maryland corporation and has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2019. The Company invests primarily in well-located, high-quality real estate properties that generate strong current cash flow and could further appreciate in value through proactive, best-in-class asset management. To a lesser extent, the Company invests in real estate-related debt investments, including real estate-related loans and real estate-related securities. Brookfield REIT OP GP LLC, a wholly owned subsidiary of the Company, is the sole general partner of Brookfield REIT Operating Partnership L.P. (the "Operating Partnership"). Substantially all of the Company's business is conducted through the Operating Partnership. The Company and the Operating Partnership are externally managed by Brookfield REIT Adviser LLC (the "Adviser"), an affiliate of Brookfield Asset Management Ltd. (together with its affiliates, "Brookfield"). The Company and the Adviser have engaged Oaktree Fund Advisors, LLC (the "Sub-Adviser"), an affiliate of Oaktree Capital Management, L.P. ("Oaktree"), to select and manage certain of the Company's liquid assets, including certain real estate-related loans and securities. Brookfield holds a majority stake in Oaktree. The Company is conducting a continuous public offering (the "Public Offering") of Class S, Class T, Class D and Class I shares of its common stock pursuant to the Securities Act of 1933, as amended (the "Securities Act"). On April 30, 2018, the Company launched its initial public offering of up to $ 2.0 billion in shares of its common stock. On November 2, 2021, the initial public

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