DBRS Comments on Brookfield Properties’ Proposed $900 Million Common Share Offering

DBRS notes that Brookfield Properties Corporation (Brookfield Properties or the Company) has announced that it has filed a preliminary short form prospectus for a $450 million base public offering and a $450 million placement to Brookfield Asset Management Inc. and Brookfield Investments Corporation.

DBRS believes this proposed equity issuance is slightly positive for Brookfield Properties’ financial profile, further enhancing financial flexibility and providing additional liquidity to fund upcoming capital commitments.

Pro forma the proposed equity issuance, Brookfield Properties will have approximately $1.8 billion of liquidity comprised of $202 million of cash on hand, over $688 million of revolving credit facilities available through June 2011 and $900 million from this equity issue. DBRS expects proceeds from the equity issue to fund debt repayment and to be used for general corporate purposes. DBRS also believes this additional liquidity could provide opportunities to acquire properties that may arise over the medium term, including the recently announced $4 billion real estate turnaround consortium (see separate press release dated August 12, 2009).

Pro forma the proposed equity issuance, Brookfield Properties will have sufficient liquidity to fund upcoming capital commitments. As at Q2 2009, the Company had approximately $294 million of debt (comprised of a $104 million term facility and property level debt) maturing for the remainder of 2009 followed by $75 million in 2010. In addition, Brookfield Properties has manageable expenditures on active development/redevelopment ($82 million) over the next few years.

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

The applicable methodology is Rating Real Estate, which can be found on our website under Methodologies.