Building-related issues in Los Angeles and Washington, Bruce Flatt wrote in the letter
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Brookfield Corp. CEO Bruce Flatt has sought to quell investor concerns about commercial real estate, saying their properties are well-funded and higher interest rates will have less negative impact.
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The alternative property manager has defaulted on mortgages on office buildings in Los Angeles and around Washington, but Flatt said the problems are “not related to those properties” and are not important to the Toronto-based company’s massive real estate business.
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“When you own 7,000 properties, it is impossible not to make a few mistakes,” Flatt said in a May 11 letter to investors accompanying first-quarter results. “But we have always prided ourselves on being extremely responsible borrowers and our reputation in the capital markets sets us apart.”
He said the company has completed $12 billion in office funding since March 2020 and has minimal debt maturing this year — and “interest due on mortgages.” in many of the same cases as interest rates are about to expire”.
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Brookfield is one of the world’s largest owners of high-end office real estate, with a portfolio that includes New York’s Manhattan West and London’s Canary Wharf. Commercial landlords in major cities around the world are being squeezed by higher borrowing costs and lower occupancy rates, as many companies continue to allow employees to work remotely at least for sale. time.
Brookfield Corp. said distributed earnings for the first quarter fell 2% to $1.16 billion from a year earlier. Earnings at Brookfield Real Estate Group fell 34% to $145 million, down slightly due to strong insurance unit profits.
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On May 10, Brookfield’s wealth management reported that chargeable capital in real estate fell 5% to $98 billion. Changes in market valuation accounted for $1.8 billion — or two percent — of the drop.
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