The Real Deal New York

Brookfield to sell up to 35% stake in Manhattan portfolio for $1.8B

Company already closed on 28% stake
By Kathryn Brenzel | August 01, 2018 04:30PM

Brookfield CEO Brian Kingston and One Manhattan West (Credit: ManhattanwestNYC)

Brookfield Property Partners sold a 28 percent stake in its Manhattan office and multifamily portfolio and plans to sell up to 7 percent more — bringing the total value of the deals to $1.8 billion.

During its second-quarter earnings call, Brookfield announced that it’d sold a 28 percent stake in its portfolio to a “Brookfield-sponsored core real estate venture.” Chief Executive Officer Brian Kingston said the company is bringing on institutional investors portfolio-wide, rather than on a building-by-building basis. He didn’t identify any of the investors. The company is expected to sell another 7 percent stake by the end of the year.

Ric Clark, senior managing partner and the chairman of Brookfield Property Group and Brookfield Property Partners, noted that under-construction properties, including One Manhattan West and its Greenpoint Landing project, will be included in the portfolio but future developments will not.

The announcement comes as Brookfield Asset Management gears up to acquire Forest City Realty in a deal valued at $11.4 billion. Its subsidiary, Brookfield Property Partners, also plans to buy Chicago-based shopping mall giant General Growth Properties for $15 billion. While Brookfield is freeing up capital for investment opportunities, the sale of the Manhattan portfolio stake isn’t directly related to either of these acquisitions.

“The capital raised from the sale will be used by Brookfield Property Partners for various higher-yielding investment opportunities, including share buybacks, and to reduce corporate leverage,” Matthew Cherry, a spokesperson for Brookfield, said.

Brookfield Asset Management is working on raising its latest real estate fund. The $10 billion investment vehicle is BAM’s largest real estate fund to date, and expected to be the biggest real estate fund to close this year. When asked by an analyst how much “dry powder,” Brookfield has in its real estate opportunity fund, Kingston noted that the fund is still raising money.

“Suffice to say that we have plenty of capital for these transactions,” he said.

Correction: An earlier version of this story misstated what projects will be included in the portfolio being sold. Future developments will be excluded from the portfolio.