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As Brookfield Prop. works feverishly to restructure and expand its operations around the world, investors and analysts are working overtime trying to figure out the repercussions of the company's ambitious plans on its share price.

BPO said last Thursday that it would acquire a stake in some of Australia's best office towers using money from North American asset sales, unload its U.S. housing division and change its name to Brookfield Office Properties.

It was a lot for investors to consider on a slow summer day, and they've reacted by unloading the company's shares. After an initial pop on the news, they are down 10 per cent as several U.S. analysts complain that the company paid too high a price for the Australian properties.

They are also concerned about the lack of funding details in the plan and the impact the news will have on future earnings.

They are particularly worried that the seller - BPO's parent company Brookfield Asset Management - may be the ultimate winner in the transaction. Its shares have gained almost 4 per cent since the deal was announced.

"The related-party deals reinforce the view among some investors that BPO shares should trade at a discount to peers to reflect complexity and potential conflict of interest," Citigroup Inc. analyst Michael Bilerman wrote in a report to clients. "BPO is clearly in the penalty box and it will take time for BPO/BAM to regain minority investor trust."

There is a lack of consensus among the analysts who follow the shares about the short-term impact of the announcements. Seventeen analysts follow the company's shares, according to Bloomberg, with nine "buy" ratings, seven "holds" and one "sell." Their average price target is $16.94.





Much of the confusion stems from the sheer volume of information being thrown at investors, Canaccord Genuity analyst Shant Poladian said, adding that the deal transforms the company into a "Class A office pure play in a league of its own as the only name which owns trophy office buildings in Canada, the U.S., the U.K. and now Australia."

"The sheer volume and complexity of information to digest was overwhelming as it included several critical transactions which have yet to be consummated and incorporates a web of related-party transactions," he said. "Management's attempt to address these announcements as part of its [second quarter]earnings call only served to agitate the investment community."

The analysts who have worried about the long-term effects of the deal are ignoring the fact that Brookfield has been in Australia for several years after acquiring Multiplex, a large real estate firm that was founded in 1962, said Dennis Mitchell, vice-president and senior portfolio manager at Sentry Investments. The deal means they have people on the ground already who understand the market, he added.

And by unloading office properties in North America that have little room for appreciation and focusing on Australia - which is outperforming its Western peers - it can own properties that have a chance to appreciate in value.

"There's lots of moving parts but the point is this is a best-in-class office building play in all the key markets," he said. "If you're Brookfield, you don't want to expand into Minnesota or San Francisco where there are weaker tenants. You want to follow companies like Merrill Lynch and RBC around the globe and be where the action is at."

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