(Bloomberg) -- A Brookfield Asset Management Ltd. property fund for well-off investors posted its first annual loss since inception as it lowered its valuation on some properties due to higher interest rates.

Brookfield Real Estate Income Trust Inc. ended last year down 6.7% after back-to-back monthly losses in November and December. 

The $2.2 billion REIT holds rental housing, logistics and other properties, mostly in the US. Its largest investments include Briggs & Union luxury rental apartments in New Jersey and DreamWorks Animation studios in California, which the Canadian firm bought for $327 million in 2021. 

The real estate fund also owns 20% of London-based Principal Place, a 15-story office building developed by Brookfield. Occupancy rates for the portfolio stood at 97% as of the end of September.

Brookfield took over the management of the properties from subsidiary Oaktree Capital Management in 2021. The plan was to expand the portfolio to compete with rival REITs, Bloomberg reported at the time. The fund has gained 9.3% annualized since inception in 2019. 

The sharp rise in interest rates since 2022 and concerns about the economic outlook have unsettled global property markets. 

On Tuesday Blackstone Inc. reported that its real estate trust for wealthy investors, Blackstone Real Estate Income Trust, notched a 0.5% loss in 2023, its lowest annual return since its 2017 debut. 

BREIT was among non-traded REITs that had to limit investor withdrawals over the past 13 months. Brookfield never gated its property fund, according to a person familiar with the matter. 

Read More: Blackstone’s BREIT Posts Worst Yearly Performance in Its History

The dislocation in real estate is giving Brookfield REIT the opportunity to boost its exposure to property credit, according to its managers, taking advantage of higher yields. 

A spokesperson for Brookfield said the firm continues to value its holdings conservatively even as interest rates are expected to stabilize.  

“We believe this provides ample opportunities for investors as we are entering a period of opportunity to invest in high-quality real estate from motivated sellers in sectors with strong macroeconomic tailwinds,” the spokesperson said in an emailed statement.

(Updates with occupancy rate in fourth paragraph and details on Brookfield and Blackstone funds starting in seventh paragraph.)

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