DBRS Comments on Brookfield’s New Real Estate Consortium

DBRS notes that Brookfield Asset Management Inc. and Brookfield Properties Corporation (collectively, Brookfield) have formed a $4 billion Investor Consortium (the Consortium) to invest in underperforming real estate. Brookfield plans to provide up to $1 billion to the Consortium with the remaining $3 billion coming from a various institutional real estate investors. The Consortium will invest in real estate companies or real estate portfolios where Brookfield can utilize its past restructuring experience to create value. Investments will be targeted primarily in North America, Europe and Australasia. Brookfield Properties Corporation plans to fund opportunities in the office sector and Brookfield Asset Management Inc. plans to fund opportunities in the other sectors.

DBRS views this investment program as neutral to Brookfield Asset Management Inc.’s ratings providing they maintain sufficient liquidity at the corporate level while supporting the Consortium’s investing program over time. It currently has $842 million in cash and financial assets on hand as well as bank lines at the corporate level, plus access to ongoing cash flow and other forms of liquidity within the Brookfield group. DBRS also views this program as neutral to Brookfield Properties Corporation’s ratings as it plans to improve its liquidity with a $450 million public issue of common shares, along with a $450 million issue of common shares to Brookfield Asset Management Inc. and Brookfield Investments Corporation.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are Rating Real Estate and Rating Utilities (Electric, Pipelines & Gas Distribution), which can be found on our website under Methodologies.