Brookfield Property Partners LP (BPY-U) is considering the sale of a stake in Brookfield Place, the lower Manhattan office complex where it has been working to fill office space left behind by Merrill Lynch & Co.
A partnership is a possibility now that the 8 million-square-foot (740,000-square-meter) property is substantially leased, Brookfield Chief Executive Officer Ric Clark said today on a conference call. Time Inc., Bank of New York Mellon Corp. and Jane Street Capital LLC reached deals in recent months to move to the office complex, the largest in downtown Manhattan.
“We have no definitive plans at the moment,” Clark said in response to a question from Michael Bilerman, a Citigroup Inc. analyst. “But our view was always that once we were able to reposition the property and create the value, we would look to bring in a partner. We never wanted to do that at the beginning of the process for fear of leaving way too much money on the table.”
The expiration of leases from Merrill Lynch, which had its headquarters in the complex before its purchase by Bank of America Corp., left the Hudson River waterfront buildings only 59 percent occupied as of September. With more than 1 million square feet of tenant agreements completed in the last two and a half months, Brookfield Place is 88 percent leased, and Brookfield is aiming to have occupancy of greater than 90 percent by year’s end, the landlord said today.
Chief Financial Officer John Stinebaugh said the company expects income from the new leases to exceed the $160 million brought in annually by the Merrill leases. Deals already signed would generate about $115 million, he said.
“We’ve got remaining space that’s in very attractive places within the towers, and we’re starting to push rents on that,” Stinebaugh said on the call. “So we think we’ll definitely be north of the $160 million that rolled off with Merrill Lynch.”
In June, Brookfield opened the first phase of a $250 million makeover of Brookfield Place’s retail section, a food court known as Hudson Eats. That entire redevelopment will be complete before late next year, Clark said.
The complex was formerly known as the World Financial Center. The name change was part of an effort to attract a more diverse tenant base, including media and technology companies, and de-emphasize the property’s ties to the financial industry.
To contact the editors responsible for this story: Kara Wetzel at email@example.com Daniel Taub