February 5, 2010 / 5:42 PM / 8 years ago

UPDATE 4-Brookfield results, forecast top expectations

* Q4 FFO $0.43 vs $0.49 year-ago, vs analysts view $0.32

* Sees 2010 FFO of $1.25 to $1.33 per share

* Shares jump as high as C$13.75 in Toronto (Adds details from conference call, additional analyst commentary; in U.S. dollars, unless noted)

By Ka Yan Ng

TORONTO, Feb 5 (Reuters) - Brookfield Properties BPO.TO posted healthier than expected results on Friday and said it sees 2010 outlook above market estimates as confidence in the economic recovery mounts, sending its shares higher.

The better than expected fourth-quarter results were largely the result of strong sales of its residential properties in Canada and lower interest costs, the Toronto-based real estate company said.

Brookfield said it expects full-year 2010 funds from operations, a key real estate measure, in a range of $1.25 to $1.33 a share. That easily topped analyst forecasts for FFO of $1.17 per share in 2010, according to Thomson Reuters I/B/E/S.

In the latest quarter, Brookfield said it leased 1.4 million square feet of space, down from 1.8 million square feet a year ago. The company said 55 percent was in renewals with existing tenants. The other 45 percent was from new leases, a sign of business confidence picking up.

Brookfield said its managed portfolio occupancy rate finished the year at 95 percent, even after losing five tenants due to the roiled economy. But signs such as Friday’s jobs figures in Canada and the United States suggest an economic recovery is in store. [ID:nN05253705] [ID:nN04115255]

Mario Saric, a real estate analyst at Scotia Capital, said positive signs were emerging from Brookfield, which has not been immune to the global credit crisis that hit the real estate market hard.

“Consistent with recent peer commentary, Brookfield’s brief outlook suggests positive office industry signs are emerging, as an expected economic recovery takes hold,” he said in a note.

Brookfield operates in several high-profile U.S. markets, including Manhattan where it is one of the biggest landlords, at such buildings as the World Financial Center. A large chunk of its revenue comes from New York, one of the key cities in its 75 million-square-foot portfolio.

Rents and occupancy in the United States have fallen and the U.S commercial real estate market is in its worst slump since the early 1990s.

But details of Brookfield’s results showed steadiness in its office space occupancy because of its diversified portfolio and leases timed to expire at wide intervals.

“Not all of our markets are the same, some are better than others, but no question there was a very noticeable difference between the beginning of the year and the end,” Chief Executive Ric Clark said on a conference call with analysts.

Still, executives acknowledged that although conditions were healthier, improving occupancy in each market remained “very challenging” because competition for tenants continues to be stiff.

In New York, for example, Brookfield says much will depend on the occupancy status of large financial services tenants such as Goldman Sachs, AIG, and Bank of America-Merrill Lynch.


Brookfield said funds from operations for the fourth quarter, ended Dec. 31, rose to $222 million from $191 million. On a per share basis, FFO dropped to 43 cents from 49 cents a year ago, partly because of dilution from the $1 billion of undeployed capital raised last summer.

The data topped analyst forecasts for FFO of 32 cents a share, according to Thomson Reuters I/B/E/S.

Funds from operations is a real estate benchmark measure that strips out the distorting effects of depreciation and other factors from earnings.

The results and the forecast lifted Brookfield shares as much as 4.3 percent on the Toronto Stock Exchange to C$13.75, their highest level since October 2008. By late afternoon, the shares were up 34 Canadian cents at C$13.52.

In New York, the stock jumped more than 5 percent to $12.82, its highest mark since late December, before paring gains to $12.61 by late afternoon.

$1=$1.07 Canadian Additional reporting by Isheeta Sanghi in Bangalore; editing by Rob Wilson

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