The Real Deal Chicago

Brookfield sees big gains in Q1 income

Company’s core office operations led the way, with softer performance on the retail side
By John O’Brien | May 04, 2018 12:00PM

Brookfield Place and CEO Brian Kingston

Brookfield Property Partners saw net income soar in the first quarter, thanks in part to gains in its core office business and investment growth that offset weaker performance in its core retail business.

Net income rose to more than $1 billion in the first quarter, up from $187 million year over year.

Brookfield’s core office portfolio occupancy held steady around 93 percent on just shy of a million square feet of total leasing. The company is one of the biggest office landlords in the country, with about 32 million square feet combined in New York and Los Angeles. New leases were signed at average rents some 17 percent higher than leases that expired during the quarter, according to the report.

Core office funds from operations rose to $153 million from $136 million, a 13 percent increase year over year.

Among the transactions noted in the report were the acquisition of the office building at 333 West 34 Street in New York for $225 million and the 1.4 million-square-foot office building at 175 West Jackson Street in Chicago for $305 million.

Brookfield also refinanced the EY office tower in Los Angeles for $265 million, generating net proceeds of $42 million, and the Five Manhattan West building in New York for $1.2 billion, generating net proceeds of $303 million.

Core retail funds from operations, though, saw more modest growth, rising to $116 million from $110 million year over year.

The company reported first quarter earnings per share of $0.69 and funds from operations of $0.38.

CEO Brian Kingston said in a statement the company continued to “generate attractive returns from our capital recycling initiatives from both balance sheet assets and private real estate funds.”

The report comes a little more than a month after Brookfield announced an agreement to acquire the rest of General Growth Properties in a cash-and-stock deal worth $23.50 per share of GGP. Friday’s earnings report from Brookfield made only passing reference to the GGP deal, saying “the transaction is progressing in normal course.”