May 5, 2011 / 12:13 PM / 7 years ago

UPDATE 2-Brookfield Office reports 1st-quarter leasing surge

* Q1 leasing was company’s second best-ever quarter

* Q1 FFO per share $0.28 vs $0.25 last year

* Shares fall with broader market decline (Recasts with details. In U.S. dollars unless noted)

By Ka Yan Ng

TORONTO, May 5 (Reuters) - Brookfield Office Properties BPO.TO, a major office landlord in Manhattan and other North American cities, reported on Thursday a “dramatic” pick-up in leasing in the first quarter and said it has high hopes for the rest of the year.

Chief Executive Ric Clark said his company leased 2.8 million square feet of space in the first quarter, the second best quarter in its history. In the year-before quarter it leased 2.3 million square feet.

He said the company is in a serious series of discussions to lease a lot more space as the global economy gets on better footing.

“We’re in the middle of a very robust amount of leasing discussions that have advanced to a level that we would classify as serious, or having a high probability of being converted to executed contracts,” Clark said on a conference call with investors after it released results that showed a 17 percent rise in funds from operations (FFO) in the first quarter.

He said Brookfield’s current negotiations, most of which are with existing tenants, involve 9.5 million square feet of space. Some tenants are looking at renting more space as the economy revives, Clark added.

He said opportunities for acquiring properties are also brighter with Brookfield having several targets in its sights.

The Toronto-based company operates in several high-profile U.S. markets, including Manhattan — where it is one of the biggest landlords, owning the World Financial Center and other buildings.

A large chunk of its revenue comes from prime properties in Toronto, Calgary and New York — some of the key cities in its 78 million-square-foot portfolio. It has added Australian properties in the past year in an effort to become a global pure-play office property player.

Brookfield reported first-quarter FFO of $155 million, or 28 cents a share, compared with $133 million, or 25 cents a share, in the year-before quarter.

FFO is a measure that excludes the effects of depreciation and other factors from the earnings of property companies.

The results just edged above the average 27 cents per share forecast of analysts surveyed by Thomson Reuters I/B/E/S.

But the slightly better-than-expected results did not help Brookfield shares, which fell with the broader market on Thursday. In Toronto, they were down 0.5 percent at C$18.66, and in New York, they were off 0.8 percent at $19.31.

In the January-March quarter, Brookfield leased space at an average net rent of $30.40 per square foot.

Commercial property net operating income rose 26 percent to $216 million. While its managed portfolio occupancy rate finished the quarter at 93.6 percent.

$1=$0.97 Canadian Reporting by Ka Yan Ng in Toronto and Arnika Thakur and Isheeta Sanghi in Bangalore; editing by Peter Galloway

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