Talking ti Doug about Brookfield Properties (BPO), Natural Gas (UNG), Yankees/Red Sox and thanking @tejcc for hooking up the Sullivan boys as bat boys at Friday’s Portland Sea Dogs game
Disclosure (“none” means no position):Long BPO, UNG
Talking ti Doug about Brookfield Properties (BPO), Natural Gas (UNG), Yankees/Red Sox and thanking @tejcc for hooking up the Sullivan boys as bat boys at Friday’s Portland Sea Dogs game
Disclosure (“none” means no position):Long BPO, UNG
A quick conversation with Doug regarding Brookfield Properties (BPO) from 4,000 ft. above sea level in New Hampshire’s White Mountains……Skype is pretty awesome…
Disclosure (“none” means no position):
A quick conversation with Doug regarding Brookfield Properties (BPO) from 4,000 ft. above sea level in New Hampshire’s White Mountains……Skype is pretty awesome…
Disclosure (“none” means no position):
Talking about Brookfield Asset Management (BAM) and Brookfield Properties (BPO) that were first featured in this post
Go to Wall St. Media for more video
Note: Late Friday Monish Pabrai disclosed a stake in Brookfield Properties
Disclosure (“none” means no position):none
Talking about Brookfield Asset Management (BAM) and Brookfield Properties (BPO) that were first featured in this post
Go to Wall St. Media for more video
Note: Late Friday Monish Pabrai disclosed a stake in Brookfield Properties
Disclosure (“none” means no position):none
Brookfield Properties Corporation (BPO) is a North American commercial real estate company. The Company operates in two principal business segments: the ownership, development and management of commercial office properties in select cities in North America, and the development of residential land. As of December 31, 2008, the Company’s commercial property portfolio consisted of investment in 108 office comprising 74 million square feet in 12 United States and Canadian markets. The Company’s primary markets are the financial, energy and government center cities of New York, Boston, Washington, D.C., Houston, Los Angeles, Toronto, Calgary and Ottawa. Brookfield Properties is 50.2% owned by Brookfield Asset Management (BAM)
Q1 Results:
Brookfield Properties Corporation (BPO: NYSE, TSX) today announced that net income for the three months ended March 31, 2009 was $38 million or $0.10 per diluted share, compared to $23 million or $0.06 per diluted share during the same period in 2008.
Funds from operations (“FFO”) was $127 million or $0.32 per diluted share for the three months ended March 31, 2009, compared with $126 million or $0.32 per diluted share during the same period in 2008.
Commercial property net operating income for the first quarter of 2009 was $327 million, compared to $340 million during the first quarter of 2008.
During the first quarter, Brookfield Properties leased 1.8 million square feet of space in its managed portfolio, improving the company’s five-year lease expiry profile by 160 basis points. The company’s managed-portfolio occupancy rate finished the quarter at 95.6%.
Q2 Results:
–Jul. 29, 2009– Brookfield Properties Corporation (BPO: NYSE, TSX) today announced that net income for the three months ended June 30, 2009 was $60 million or $0.15 per diluted share, compared with $45 million or $0.11 per diluted share during the same period in 2008.
Funds from operations (“FFO”) was $148 million or $0.38 per diluted share for the three months ended June 30, 2009 compared with $157 million or $0.40 per diluted share during the same period in 2008.Commercial property net operating income for the second quarter of 2009 was $338 million, compared with $341 million during the second quarter of 2008 as a result of the impact of a weaker Canadian dollar and a lower contribution from non-managed properties. Absent these items, commercial property net operating income increased 3% over the same period in the prior year.
During the second quarter, Brookfield Properties leased 725,000 square feet of space in its managed portfolio at an average net rent of $25 per square foot, which represents a 32% improvement versus the average expiring net rent of $19 on this space in the quarter.Additionally, the company has improved its five-year lease rollover exposure by 240 basis points since the start of the year. Year-to-date leasing totals 2.5 million square feet. Brookfield’s managed portfolio occupancy rate finished the quarter at 95%
Here is what makes Brookfield so interesting to me at this time..
From the BPO Press Release:
Brookfield Asset Management Inc. (NYSE/TSX/Euronext: BAM) and Brookfield Properties Corporation (NYSE/TSX: BPO) (collectively, “Brookfield”) today announced the formation of a US$4 billion Investor Consortium dedicated to investing in under-performing real estate. The Consortium will invest in equity and debt in under-valued real estate companies or real estate portfolios where value can be created for stakeholders in a variety of ways, including financial and operational restructuring, strategic direction or sponsorship, portfolio repositioning, redevelopment or other active asset management. Investments will be targeted at corporate property restructurings with a minimum US$500 million equity commitment, and pursued on a global basis, but with a focus on North America, Europe and Australasia.
In addition to Brookfield, the participants in the Consortium consist of a number of institutional real estate investors who have each allocated between US$300 million and US$1 billion to the Consortium. Brookfield has allocated US$1 billion to the Consortium with opportunities in the office sector being funded by Brookfield Properties, at its option, and opportunities in other sectors being funded by Brookfield Asset Management. The Consortium participants have expertise in investing across different geographies and property types and this expertise will be pooled together to maximum advantage in individual investment opportunities.
“This is the next step in our global property growth plan, as it combines our strength as one of the world’s leading real estate operating companies with our extensive expertise in corporate restructurings and strategic acquisitions,” said Ric Clark, CEO of Brookfield Properties.
Brookfield Properties and Brookfield Asset Management will each own 25% of the fund.
So we know based on results these guys know how to buy property that will hold up during the worst of times. So, when we are in the worst of times, doesn’t it make sense to go with the guys that have near $5B to pick up the pieces?
BUT, the big fear on any real estate company is their debt. Can they roll it/pay it or will it undo them? Here is Brookfield immediate picture:
Leases you say?
Lease expiration schedule:
The beauty of investing in real estate this way is that you get the benefit of these folks expertise which, based on results, is tops in the industry. You also get a global opportunity and the patience they have to execute the right deals at the right time.
So, armed with $4.9B to invest (which is, by the way, more than the current market cap of the company) I think folks looking into real estate would have a hard time going wrong here…
Full Report:
bpo
Here is their current portfolio Q2, 2009 (XLS)
Link to SEDAR documents (Canadian version of SEC)
Disclosure (“none” means no position):None
When the boys at Brookfield Asset (BAM) are buying, I am intrigued.
August 08, 2009 David Friend
THE CANADIAN PRESS
Executives at investment giant Brookfield Asset Management Inc. are confident they can scour the international market for distressed assets and acquisition deals for at least two more years, even if the economy starts to recover and the U.S. housing market rebounds.“While the capital markets are more positive than they have been for a long period of time, that doesn’t mean that people who overfinance their properties – or are in extreme distress – are fixed,” chief executive Bruce Flatt said on a conference call. “There are still a lot of opportunities out there, and we think there will be for 24 months minimum. I don’t think we feel any rush to be doing anything.”
Flatt told analysts that the company has spent the last year and a half buying out partners, acquiring rights offerings and making other deals for distressed assets. “We still believe this is one of the greatest investment periods for these type of assets that we’ve seen in a long time,” he said. He also said Toronto-based company wants to put capital into “distressed opportunities as we find them, and where we have an operating base.”
Brookfield said profits in the second quarter rose by 33 per cent to $147 million (U.S.), or 24 cents per share for the quarter ended June 30, up from a year-earlier profit of $110 million or 17 cents per share. Cash flow from operations declined during the period to $276 million or 46 cents per share, compared to $378 million or 62 cents. Brookfield said last year’s cash flow was boosted by special items. Total quarterly revenue fell to $3 billion from $3.4 billion a year ago.
Brookfield’s massive office property portfolio – including Brookfield Place and the Exchange Tower in Toronto, Bankers Hall in Calgary, New York’s World Financial Center in and Bank of America Plaza in Los Angeles – is 95 per cent occupied. The company reported that it has also contracted about 80 per cent of its renewable power generation until the end of 2010.
Chief financial officer Brian Lawson expressed some optimism for the company’s residential business.“The results from our number of our shorter duration businesses, such as our residential operations, appear to have bottomed out, albeit at pretty low levels,” he said. Flatt said Brookfield has spent the past six months buying residential land, and invested $250 million in its U.S. residential business. “We believe we are past the worst of the down cycle in housing,” he said. “While we don’t expect a robust return, we believe we have or will soon see a bottom in many of the key U.S. housing markets.”
Brookfield controls Fraser Papers Inc., wood panel producer Norbord Inc., Great Lakes Hydro Income Fund and the Brookfield Real Estate Services Fund, that includes Royal LePage and other brands. The holding company’s forestry assets have been battered by the global economic downturn, with Fraser Papers being forced to file for creditor protection in Canada and the United States in June. Fraser Papers reported that it lost $8 million or 36 cents a share for the quarter ended June 30, down from $15.6 million or 31 cents a share for the same 2008 period.
During the second quarter, Fraser booked a net gain of $12.5 million from unwinding its foreign exchange hedging program.Shares in the company gained 12 cents to close at $21.86 yesterday on the Toronto Stock Exchange.
What does it all mean? Notice what he said “the next 12-24 months”. No matter what anyone says, housing NEVER has a “V” recovery. It is a Nike Swoosh recovery. A steep fall followed by a long bottom and then a very gradual climb out. What Flatt is saying is that we are nearing that bottom part and will enter the prolonged bottom dredge.
This goes to what we have been saying here for a while, 2010 will be the bottom in housing and then we will sit and then begin the climb out.
Why is all this positive? It means the dramatic price falls are a thing of the past. We more than likely have some more downside 10%-15% and then we flatline before climbing out. When do prices recover to 2006-07 levels? If history tells us, it will be 7 years based on the 1990-91 housing bust. Now, it should be noted that fall was from far less loftier levels that this one. Because of that 7-10 years would seem to be the more realistic scenario.
Disclosure (“none” means no position):
Turn out Goldman Sachs and Brookfield Asset also got involved in the bidding. The final DIP lender must be approved by the judge but after the process that has been undertaken, one ought to assume that it gets rubber stamped.
Now that this is done, the next big decision, expected tomorrow and on the CMBS lenders challenge to certain properties being included in the filing. The judge is expected to rule with GGP in this one also and that sets the stage for stronger operational results through the BK process.
Here is the DIP news from this afternoon.
The Farallon group, which includes Canpartners Investments IV LLC and Delaware Street Capital Master Fund LP among others, beat out both activist investor William Ackman’s Pershing Square Capital Management LP and a third group led by Goldman Sachs Group Inc. (GS) to provide the $400 million in financial backing, according to people familiar with the talks.
General Growth outlined the new debtor-in-possession, or DIP, financing in filings in its case on Tuesday in U.S. Bankruptcy Court in the Southern District of New York.
The new Farallon pact caps nearly four weeks of back-and-forth negotiations in which General Growth first chose a proposal from Pershing, then went with Farallon’s group, then back to Pershing and finally back to Farallon. The drawn-out process resulted in several aspects of the deal shifting in favor of General Growth, including the DIP lenders requiring less collateral for their loan and the elimination of an offer of warrants convertible to company stock after the bankruptcy.
The new Farallon pact provides lenders in the DIP pact a secondary claim to cash flow at General Growth’s corporate level, behind the claims of secured lenders. Previous pacts provided the DIP lenders a senior lien on that cash flow, raising objections from General Growth’s secured lenders. Another change: The DIP lenders no longer get a second lien on General Growth assets that already have first mortgages. The DIP lenders do, however, retain a first lien on a collection of unencumbered properties.
The new pact also omits any warrants for the lenders similar to those in the initial Pershing deal, which would have granted Pershing warrants convertible to 4.9% of General Growth’s stock upon emergence from bankruptcy. Pershing already amassed a nearly 8% stake in General Growth through buying stock in the months before the bankruptcy filing. Pershing also tied up another 17% of General Growth stock by putting it in swap contracts with various investment banks.
Now, the new arrangement with the Farallon group allows for General Growth to pay off the DIP lenders by converting their loan into up to 8% of the company’s stock, depending on the company’s equity value upon emerging from bankruptcy, rather than paying in cash. The original Pershing deal had a similar provision. Farallon and some of the other lenders in its group already are General Growth creditors, holding an undisclosed amount of the company’s bonds.
The Farallon deal comes with an interest rate of Libor plus 12%, limiting the lowest-acceptable Libor rate to 1.5%. The pact has a term of two years. The exit fee is set at 3.75%, down from 4% in the Farallon group’s initial proposal.
General Growth intends to use much of the DIP financing to pay a short-term, high-interest loan that Goldman provided it in the months before its bankruptcy filing. Goldman’s failed bid to provide General Growth’s DIP financing included participation from Brookfield Asset Management Inc. (BAM), the Canadian office and retail property owner.
Disclosure (“none” means no position):Long GGWPQ, None
Could it be time? They have sure sold off unlike anytime before. The recent sell-off is worse than the 1970-1980 one.$$
Check out the following chart:
Trend line not only has been broken, it has been demolished to the downside.
What to do? Here is the class of the group, (VNO) Vornado, )JOE) St Joe, (FUR) Winthrop REIT and (BAM) Brookfield Asset Management.
Brookfield Asset Management Inc.(NYSE:BAM) announced last month its results for the third quarter ended September 30, 2008.
Cash Flow From Operations:
Cash flow from operations for the third quarter totalled $355 million ($0.58 per share). Operating cash flow in the same quarter in 2007 was $255 million ($0.40 per share) on a comparable basis, which excludes a security disposition gain of $66 million, or $321 million ($0.52 per share) including the gain. On a comparable basis, operating cash flow per share increased by 45% quarter-over-quarter due to improved water levels and pricing in the company’s renewable power business and an increased contribution from our commercial office business.
Brookfield is diversified with holding in office building and hydro electric plants.
The St. Joe Company (JOE) is a real estate development company. The majority of its land is located in Northwest Florida. The Company owns approximately 700,000 acres, approximately 310,000 acres of which are within 10 miles of the coast of the Gulf of Mexico. It is engaged in town and resort development, commercial and industrial development, and rural land sales. The Company also has interests in timber. The Company operates through four operating segments: residential real estate, commercial real estate, rural land sales and forestry. Residential real estate segment develops large-scale, mixed-use resort, seasonal and primary residential communities. The commercial real estate segment develops and sells real estate for commercial purposes. The rural land sales segment markets and sells rural land from its holdings in Northwest Florida. The Forestry segment focuses on the management and harvesting of the Company’s timberland holdings
The key on St. Joe? It is virtually debt free and has a decent cash position (over 2 to 1 cash to debt)
Vornado Realty Trust is an integrated real estate investment trust (REIT) and conducts its business through Vornado Realty L.P., a Delaware limited partnership (the Operating Partnership). Vornado is the sole general partner of, and owned approximately 90.1% of the common limited partnership interest in, the Operating Partnership at December 31, 2007. The Company’s operating segments include New York Office Properties, Washington, DC Office Properties, Retail Properties, Merchandise Mart Properties, Temperature Controlled Logistics Properties and Toys “R” Us (Toys). During the year ended December 31, 2007, the Company owned directly or indirectly, all or portions of 28 office properties aggregating approximately 16 million square feet in the New York City metropolitan area (primarily Manhattan), all or portions of 83 office properties in the Washington, DC and Northern Virginia areas.
NET INCOME applicable to common shares for the quarter ended September 30, 2008 was $31.4 million, or $0.20 per diluted share, versus $116.5 million, or $0.74 per diluted share, for the quarter ended September 30, 2007. Net income for the quarters ended September 30, 2008 and 2007 include $1.3 million and $31.9 million, respectively, for our share of net gains on sale of real estate. Net income for the quarters ended September 30, 2008 and 2007 also include certain items that affect comparability which are listed in the table below. The aggregate of these items and net gains on sale of real estate, net of minority interest, decreased net income applicable to common shares by $31.2 million, or $0.20 per diluted share for the quarter ended September 30, 2008 and increased net income applicable to common shares by $54.5 million, or $0.33 per diluted share for the quarter ended September 30, 2007.
Winthrop Realty Trust, formerly First Union Real Estate Equity and Mortgage Investments, is a real estate investment trust (REIT). The Trust is engaged in the business of owning real property and real estate related assets, which it categorizes into three specific areas: ownership of operating properties, which the Company refers to as operating properties; origination and acquisition of loans and debt securities secured directly or indirectly by commercial and multi-family real property, including collateral mortgage-backed securities and collateral debt obligation securities, which it refers to as loan assets and loan securities, and ownership of equity interests in other REITs, which it refers to as REIT equity interests. It acquires assets through direct ownership, as well as through entering into specific strategic alliances and joint ventures. In March 2008, Winthrop Realty Trust announced that it had sold all of its interest in Lexington Realty Trust.
For the first nine months of 2008, EPS is a loss of $.21 vs a $.36 profit in 2007.
As one looks through the results, the business of being a landlord is still profitable. Rent income is stable. Reduction in results is due to write-downs of investment portfolios and increased reserves required from banks. BAM and VNO are still solidly profitable and would be the pick of the litter.
The group is clearly oversold. The question is, when does the oversold situation reverse itself? That, is a huge question. Sorry, do not have the answer. But in this case, with BAM and VNO, you can get profitable companies selling selling at discount to their earnings power yielding 4% and 7% respectively. All are bouncing around at their low’s.
It may be time to take a closer look at the sector, only the top of it though
Disclosure (“none” means no position):None
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