Brookfield Divesting Residential Business

In July, Brookfield Office Properties Inc. announced its intentions to divest itself of its residential real estate business and focus solely on the office sector. The move included a change in the name from Brookfield Properties Corp. In a video interview with at REITWorld 2010: NAREIT's Annual Convention for All Things REIT at the Waldorf Astoria Hotel in New York, Ric Clark, Brookfield's president and CEO, said the company believes investors would find it more appealing as a pure-play office company. That decision prompted a deal to sell the company's residential assets for approximately $1.1 billion. Clark said Brookfield plans to re-deploy the proceeds from the sale into acquiring more office assets.

On a global scale, the big news with Brookfield has been the company's growth in Australia. "We've been studying the Australian market for some time," Clark said. "It is basically an economy that is resource driven." A major benefit of investing in Australia is that it is a familiar, developed economy that stands in close proximity to Asia, according to Clark. "Its major trading partner is Asia, so, effectively, investing in Australia is a good way to play the growth in Asia," Clark said. In terms of tailwinds behind Brookfield heading into 2011, Clark cited the firm's diverse portfolio of office assets as a major plus. The markets around the world in which Brookfield competes, such as New York and Houston, have already started to recover, Clark said. Furthermore, "they're picking up steam," according to Clark. "The main thing for us is that we're invested in good markets that are recovering nicely and we're seeing good rental growth," Clark said. Brookfield's portfolio includes international holdings in Canadian cities, such as Toronto and Edmonton. In Australia, the company owns assets in Sydney, Perth and Melbourne. On Nov. 18, Brookfield announced a secondary equity offering on its Canadian trust units. In the third quarter of 2010, the company had funds from operations of 32 cents per diluted share, compared with 28 cents per diluted share during the third quarter of 2009. Brookfield's net income attributable to common shareholders for the three months ended Sept. 30, 2010, was $156 million or $0.28 per diluted share.

Clark: Brookfield's new focus on office, Australia will pay off

Brookfield Office Properties announced this summer it was shifting out of its residential real estate business, which had been focused largely in Canada. Instead, it will devote its resources to the office sector as well as the Australian market. Ric Clark, Brookfield's president and CEO, explains the reasoning behind these moves. "We believed Brookfield would be more appealing as an office pure play," he said. As for the shift into Australian properties, Clark notes it is a resource-driven economy and a major trading partner with Asian nations. It is a good way to ride the growth in Asia but from a Western base, he says. (11/22) LinkedInFacebookTwitterEmail this Story

on November 30, 2010