The west looking view from the 50th floor of the new Bay-Adelaide Centre as unveiled by Brookfield properties September 16, 2009.J.P. MOCZULSKI/The Globe and Mail
Brookfield Office Properties Inc.
Tuesday's close : $16.50 a share, up 4 cents 52-week trading range : $15.21 – $18.48 a share Annual dividend : 0.553 cents a share for a yield of 3.4 per cent Analysts' ratings : There were 6 buys, 8 holds and no sells, according to Bloomberg data. Target prices ranged from $16.40 to $20.49 a share.
Recent history : Shares of the office property developer and manager have moved sideways in recent years amid uncertainty over who will fill a big chunk of space at New York's World Financial Center that will be vacated by Bank of America Merrill Lynch next year. Only about a third of the bank's 4.6-million sq. ft. of space has been re-leased or sub-leased to other tenants. Brookfield Office Properties' stock came under pressure mid-year after a lack of progress on the leasing front. The stock has risen 6.8 per cent this year, including reinvested dividends.
Outlook : The company plans to rename its World Financial Center tower in Lower Manhattan to Brookfield Place in late 2013 to broaden its appeal beyond financial services to sectors like technology and social media. "If they do get leasing momentum on Brookfield Place, it will be positive for the stock," said Lee Goldman, a portfolio manager with First Asset Investment Management Inc., which owns Brookfield Office shares.
The stock should also benefit from the company rolling over its high-interest debt that will be maturing over the couple of years, Mr. Goldman added. "Assuming interest rates stay low, they will definitely have big interest savings from that...They also have a big development pipeline [in Canada, Australia and Britain] that they can develop."
Meanwhile, its parent company, Brookfield Asset Management Inc., has announced plans to spin off its real estate assets into a new publicly listed venture to be called Brookfield Property Partners. The move expected early next year is fuelling speculation that the new company, which will own about 50 per cent of Brookfield Office Properties, could boost its stake in the office development subsidiary. Shares of Brookfield Office Properties currently trade at a significant discount to an estimated net asset value of $20 a share.
If Brookfield Office Properties continues to trade at a discount to its NAV and Canadian peers, then Brookfield Property Partners could continue to buy its shares and provide support for the stock, Mr. Goldman said. "There is also speculation that they may bring the whole thing into Brookfield Property Partners...That assumes that they are going to pay some kind of a premium to buy the stock off the public."