This article is from the Australian Property Journal archive
THE pressure has eased for Brookfield Multiplex to float a $3.8 billion REIT because its sister company Brookfield Properties has come to the rescue with $1.6 billion.
The dual listed New York and Toronto Stock Exchange listed Brookfield Properties has revealed that it will become a global “pure play office trust” by acquiring an interest in 16 premier office assets worth $1.6 billion owned by Brookfield Multiplex.
The move is a big relief for Brookfield Multiplex, which had been sounding the volatile market in the past year, to publicly float its $3.8 billion office REIT. But the company has joined the queues of prospective IPOS, waiting by the sidelines because the market is not ready to pay a premium for IPOs as witnessed recently by the postponed IPO of German construction group Valemus.
The deal will see Brookfield Properties buy interests in 16 properties in Sydney, Melbourne and Perth worth $1.6 billion covering 743,224 sqm of office space.
In Sydney Brookfield Multiplex owns:
– a 30% interest in Darling Park Complex;
– 100% in the Macquarie Bank Building;
– 50% in the Ernst & Young Centre;
– 50% in IAG House;
– 50% in KPMG Tower;
– 100% in American Express House;
– 50% in Worth Square retail and car park;
– 50% in ATO World Square;
– 25% in NAB House;
– And 100% in King Street Wharf retail
In Melbourne, it owns:
– 100% in Southern Cross East;
– 50% in Southern Cross West;
– 43% in Bourke Place;
– And 100% in Defence Plaza
In Perth, it owns:
– 50% in Bishop South Tower;
– And 100% in the CitySquare development.
Brookfield Properties CEO Ric Clark said this strategy will position the company at the forefront of the global office property scene. The company’s landmark assets include the World Financial Center in Manhattan, Brookfield Place in Toronto, Bank of America Plaza in Los Angeles and Bankers Hall in Calgary.
“The global financial crisis has been less severe in Australia and its economy avoided recession. As the world’s economies begin to emerge from the global economic downturn, the Australian economy is in a stronger position than any other advanced economy.
“Given its rich resource base and strong trading relationship with the world’s fastest growing economies, investment in Australia should put Brookfield Properties in a strong position to experience meaningful growth as the global economies emerge from the economic downturn,” he added.
“Australia has a strong and growing pipeline of investment projects that will boost investment over the coming years. The Canadian $ has outperformed the Australian $ in recent months posing an opportune time to decrease exposure to Canadian assets and increase exposure to Australian assets.
“BPObelieves expansion to Sydney, Melbourne and Perth in Australia will generate more stable and growing returns than new North American markets,” Clark continued.
The transaction will be funded from available liquidity of $US1.3 billion and from a $US750 million subordinate bridge acquisition facility from parent company Brookfield Asset Management, which will be repaid following some asset sales, including a sell down of Brookfield Properties’ equity interest in its publicly-listed company Brookfield Office Properties Canada.
And to reflect this strategic repositioning, Brookfield Properties Corporation will begin operating immediately under the name “Brookfield Office Properties”.
Brookfield Properties’ board of directors established an independent committee to assess the transaction. The committee retained Morgan Stanley as its financial advisor. The independent committee unanimously recommended that the board of directors approve the proposed transaction.
This transaction is expected to be completed in the third quarter of 2010.
Australian Property Journal
