Spike In Interest Rates Pushes Brookfield Property Unit To A Loss

A massive spike in interest costs on its $67B debt pile pushed Brookfield’s property division to a loss in the third quarter.

Brookfield Property Partners on Tuesday reported a $367M net loss for the three-month period ending in September. It reported a $4M profit for the same period last year.

So far this year, the division has posted a $1.2B loss. 

In its results statement, Brookfield attributed the loss to a jump in interest payments, which rose from $707M in the third quarter of 2022 to $1.2B in Q3 this year. 

Brookfield Property has $67B of debt, according to the filing. Of that, $5.6B matures this year and a further $20.4B matures next year, although $12.7B of the total can be extended, the company said. 

It added that it is not paying interest on about 3% of its loans, or about $2B, the same figure it reported for the end of Q2. Brookfield Property said it was confident it would reach a restructuring agreement with lenders, but if an agreement is not reached, it could end up handing the keys back on assets. 

Brookfield Property said about $28B of its secured debt was at fixed interest rates, with a weighted average interest rate of 4.3%. About the same amount was at a variable interest rate, with a weighted average rate of 8.1%. 

The company owns $130B in assets split into three main buckets: offices, shopping malls and stakes in the opportunity funds managed by parent company Brookfield Asset Management. 

Its office portfolio, including 131 assets in the U.S., UK, Middle East and Asia totaling 74M SF, made a funds from operations loss of $8M in Q3. It generated funds from operations of $43M in Q3 last year.

The value of the portfolio fell by $1B in Q3. Including assets either sold or put up for sale for $1.35B, its office portfolio was valued at $20.7B at the end of the quarter.

The retail portfolio fared better, but quarterly FFO still fell from $107M in Q3 2022 to $62M in 2023. The portfolio comprises 57 malls totaling 51M SF. The value was broadly flat at $19.5B.