The Real Deal New York

Trump victory delays decision on Brookfield REIT conversion

Toronto-based RE giant to wait for tax reform
By Konrad Putzier | February 03, 2017 01:30PM

Brookfield Place

Donald Trump’s election victory led Brookfield Property Partners to delay a decision on whether to place its U.S. assets into a real estate investment trust.

The new administration’s plan to change the tax code “has led us to take a more cautious approach on that decision until we have more clarity,” the company’s CEO Brian Kingston said during an earnings call Friday.

Toronto-based Brookfield Property Partners TRData LogoTINY, which was spun off from Brookfield Asset Management in 2013, is a real estate investment firm, but unlike firms like SL Green Realty or Vornado Realty Trust it is not structured as a REIT. Becoming a REIT has certain tax advantages, but what those are will remain unclear until the new administration and Congress have agreed on a reform of the corporate tax system.

Kingston argued that becoming part of the S&P 500’s new REIT index “would be a net benefit in terms of increasing investor interest,” but a conversion would also place new limits on its operations. He claimed the company isn’t leaning in either direction.

Brookfield is one of New York’s most active real estate investors and is currently developing the $8.6 billion mixed-use complex Manhattan West in partnership with the Qatar Investment Authority.

The company is shopping the Midtown office tower 245 Park Avenue and a 49 percent stake in Brookfield Place.  It raised a net $3 billion from office and retail property sales in 2016 globally, and plans to add another $1 billion to $2 billion in 2017.