Brookfield's Q2 Success More Global Than Local

NEW YORK CITY-Activity in its home burg of Manhattan, where it's redeveloping the former World Financial Center mixed-use complex as Brookfield Place, largely took a back seat to leasing and development in other markets in Brookfield Office Properties' second-quarter results. Although the REIT did secure $1 billion in financing for two of the Brookfield Place New York towers during Q2, its biggest lease was in Virginia's Washington, DC suburbs, while much of the development and acquisition/disposition news was made outside the US.

That included a one-million-square-foot pre-leasing commitment from anchor tenant Cenovus Energy for the east tower of Brookfield Place Calgary. Across the pond in London, BPO closed on its acquisition the final two buildings from the Hammerson portfolio, 125 Old Broad Street and Leadenhall Court, while in Perth, Australia, it secured pre-leasing commitments for 40% of the space at the 366,000-square-foot Brookfield Place Tower 2, on which construction began during the quarter.

BPO also advanced its planned acquisition of MPG Office Trust, which will magnify the REIT's West Coast presence. Ninety-seven percent of MPG shareholders voted to approve the deal, which is expected to close in Q3.

“The second quarter of 2013 marked a new phase of growth for Brookfield Office Properties as we announced the proposed acquisition of the MPG portfolio in Los Angeles and advanced the construction of the second tower at Brookfield Place Perth,” says Dennis Friedrich, BPO's CEO. Following the end of the quarter, BPO extended its tender offer for all outstanding preferred shares of MPG stock to midnight East Coast time on August 2.

BPO's funds from operations, $171 million or 30 cents per diluted share, remained basically flat from Q2 2012 when one-time items are taken out of the equation. Net income more than doubled from $217 million the year prior to $441 million in the three-month period that ended June 30.

Commercial property net operating income for Q2 rose slightly to $344 million, compared with $342 million a year ago. Same-property net operating income similarly experienced a slight year-over-year increase, advancing 1.9%.