The Real Deal New York

New York’s biggest commercial landlord hit record highs in 2018

Brookfield Asset Management ended last year with $7.5B in net income
By Mary Diduch | February 14, 2019 03:22PM

Bruce Flatt and Manhattan West

Brookfield Asset Management, which gobbled up Forest City Realty Trust, General Growth Properties and Kushner Companies’ 666 Fifth Avenue is en route to becoming New York’s largest commercial landlord, had a record year in 2018.

The Toronto-based alternative asset manager generated $7.5 billion of net income last year, a record for the firm, which reported its year-end results on Thursday. Last year, Brookfield’s net income was about $4.6 billion, marking a 65 percent increase in net income for 2018.

Meanwhile, funds from operations came in at $4.4 billion for the year, $1.8 billion of which came from the firm’s real estate segment. Overall, FFO was up 16 percent from the year prior. Brookfield’s FFO could have been higher, if “not for the impact of the year end volatility on our financial assets, much of which has reversed in the first quarter following the market recovery,” the firm said.

Last year, the firm’s real estate arm, Brookfield Property Partners, also gobbled up two real estate investment trusts. After buying mall REIT GGP for $15 billion, Brookfield said it wants to turn many of those malls into mixed-use “mini cities.”

And Brookfield’s $6.8 billion acquisition of Forest City Realty Trust, which officially finished in December, cemented Brookfield as the largest commercial landlord in New York City.

Also in New York, last year Brookfield jumped in on some notable development and redevelopment projects, including acquiring the ground lease at Kushner Companies’ 666 Fifth Avenue office building, with the intent to overhaul it. Last year the firm also bought a seven-building development site in Mott Haven for $165 million, which will be the site of a megaproject spanning 1.3 million square feet.

Brookfield recently closed its $15 billion real estate fund, its largest to date, the firm said in its earnings release. Brookfield ended the year with $34 billion of liquidity to invest, after investing or committing $35 billion.

And as for its outlook for the future, should the U.S. fall into a recession?

“We’re not compelled to invest the cash we have,” CEO Bruce Flatt said on an earnings call. “It’s time to be wary, but we’re optimistic.”

— Kathryn Brenzel contributed reporting.