NEW YORK CITY — Brookfield Properties Corp. has announced a plan to reposition itself as a global office property company. As part of the plan, the company will acquire an interest in an Australian office portfolio and divest itself of its residential land and housing business.
Brookfield Properties is acquiring its stake in the office portfolio from Brookfield Asset Management for$1.4 billion (US). The portfolio contains 16 office buildings totaling 8 million square feet of space. Ten of the properties are located in Sydney, four are located in Melbourne and two are located in Perth. Portfolio occupancy averages 99 percent. The estimated value of the portfolio is $3.4 billion (US). Brookfield Properties plans to fund the transaction from $1.3 billion in available liquidity and from a $750 million subordinate bridge acquisition facility, which will be provided by Brookfield Asset Management.
Brookfield Properties already has a presence in Australia's office market. It currently has a development pipeline of 15.6 million square feet, which includes City Square, a 926,000-square-foot office tower under development in Perth. The company also has the right of first offer to develop or purchase three development sites: The Foundry in Melbourne, Bathurst Street in Sydney and Bishops See North Tower in Perth.
To divest itself of its residential holdings, Brookfield Properties is commencing discussions with Brookfield Homes Corp. regarding the merger of its residential operations with Brookfield Homes. If the merger is completed, Brookfield Properties' equity interest in the residential business would be converted into a listed security in the merged company, which Brookfield Properties would then dispose of through an offering to its shareholders. Brookfield Asset Management would acquire any shares of the merged entity not sold in the offering.
Brookfield Homes was created in 2003 and has a current market capitalization of $500 million. Its land development and home building operations largely focus on Canadian markets, but it is also active in the California and Washington, D.C., areas.
Brookfield Properties will immediate begin operating under the name Brookfield Office Properties. Shares will continue to trade on the New York and Toronto stock markets under the ticker symbol “BPO”.
In a statement, Ric Clark, president and CEO of Brookfield Properties, said, “Following these transactions, Brookfield Properties will have leading office portfolios in each of the United States, Canada and Australia, as well as a modest but growing interest in the United Kingdom. This will transform Brookfield Properties into the global security for investors looking for ownership in premier office assets.”
— Coleman Wood