UNITE HERE launched a billboard today warning customers of American Equity Investment Life Insurance Company (NYSE:AEL), that it may be purchased by the Bermuda-based affiliate of Brookfield (NYSE:BN). Brookfield has defaulted on over $1 billion in commercial real estate this year alone. The billboard is located less than a mile from the Iowa Insurance Division, the state agency that would need to approve any sale of Des Moines-based American Equity.
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(Photo credit: Andrew Sachin Clements for UNITE HERE)
“Are you ready for Brookfield’s ‘office real estate apocalypse’?” the billboard asks. Media outlets Fortune and Business Insider have both declared an “office real estate apocalypse.” According to research compiled by UNITE HERE, at least $6.3 billion of Brookfield affiliates’ office and retail loans are either in default, have been surrendered to lenders, or are at risk of default according to analysts and industry press.
The financial health of Brookfield’s commercial real estate holdings may be of interest to Iowa regulators and American Equity policyholders because of events following Brookfield’s acquisition of another life insurance company, American National (NASDAQ:ANAT). Since its acquisition by Brookfield Reinsurance (NYSE:BNRE), American National has sold billions of dollars of bonds and securities and reinvested primarily in complex and illiquid securities, including commercial real estate debt, private credit, and other securities structured or originated by Brookfield’s own affiliates or joint ventures. Brookfield has told investors the firm plans to allocate 40 percent of insurance capital to its own private funds.
UNITE HERE’s research has uncovered over $1 billion in debt instruments that appear to be related to Brookfield’s real estate holdings on American National’s 2022 sworn Annual Statement. These include bonds issued by three entities related to Brookfield Property Partners (formerly BPY) (NASDAQ:BPYPP), which Brookfield took private in 2021 after BPY suffered over $2 billion in losses in 2020. On October 6, Bloomberg reported that S&P Global is considering cutting Brookfield Property Partners to junk status.
“Hardworking Americans who’ve entrusted their life savings to American Equity deserve to know if an acquisition could result in a dramatic shift in its investment strategy,” said Charles Decker, Research Coordinator at UNITE HERE. “Moving real estate debt onto a life insurance company’s books during the ‘office real estate apocalypse’ might be a good deal for Brookfield, but we don’t know what it means for policyholders. If Brookfield’s purchase of American Equity is approved, what will AEL’s books look like after the takeover?”
UNITE HERE is the hospitality workers’ union in the U.S. and Canada, representing 300,000 workers in hotels, gaming, food service, airports, and more.
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Contacts
Ted Waechter twaechter@unitehere2.org
