Brookfield Property Partners LP is considering options for its office properties in the Northeastern United States that include the potential sale of a stake that could value the portfolio at as much as US$10 billion, people familiar with the matter said.
Brookfield Property, one of the world’s largest commercial real estate firms, has been looking for ways to boost its under-performing stock price and reallocate capital from mature, stable assets into higher-returning investments.
The sale, which could attract interest from investment firms and sovereign wealth funds, would allow Brookfield Property to capitalize on the value of its high-end office assets, many of which are in major U.S. cities such as New York and Washington, the sources said this week.
It would also allow Brookfield Property to pay down a substantial amount of debt, setting up the portfolio for a possible separation into an independent publicly traded real estate investment trust (REIT) down the line, the sources added.
Brookfield Property is still working on carving out the Northeastern U.S. office properties from its US$66 billion real estate portfolio, which spans the office, retail, multifamily housing and industrial sectors, according to the sources.
The firm has not yet launched a process to sell the stake, and no deal is certain, said the sources, who asked not to be identified because the deliberations are confidential.
A Brookfield Property spokesman declined to comment on the possible stake sale in its Northeastern U.S. office portfolio, and would say only that the firm is not planning to create a public REIT for the assets in this region.
Brookfield Property shares jumped as much as 5 percent on the news and closed 2.5 percent higher at US$23.75 on Wednesday, giving the firm a market capitalization of US$16.7 billion. The shares had previously risen 7.8 percent year-to-date, versus a 13.3 percent rise in the S&P 500 Index INX.
Brookfield Property was created in 2013 when it was spun off by its parent Brookfield Asset Management Inc, a Toronto-based alternative investment firm with around US$250 billion in assets. Brookfield Asset Management remains the largest shareholder in Brookfield Property.
In 2014, Brookfield Property took full ownership of Brookfield Office Properties, spending around US$5 billion in cash and equity to consolidate its existing 51 percent stake in that company.
(Reporting by Carl O’Donnell in New York; Editing by Steve Orlofsky and Matthew Lewis)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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