As of Q3 2008, operations were humming along:
- Solid results with commercial properties at 96% occupancy with average rents @ $23/sqft
- Power generation benefitting from water levels 15% higher than average
- Infrastructure segment stable with the transmission business offsetting weakness in the timberlands
- While specialty funds and private equity are down (as would be expected in a financial market downturn), development cash flow increased 54% y/y.
- Additionally, the company managed to arrange several transactions include selling some timberlands, insurance business and property with expected net proceeds of $1.2B.
The company’s access to capital markets seems unimpaired relative to other players. Several properties were refinanced (as always, non-recourse to the corporate level) and BAM itself recently issued $150M of notes at 6.5%, which is a good rate post-Lehman. Browsing over their supplemental disclosure, the company has modest debt maturing in the short-term, with $300M due in 12/08 (already financed) along with $582M in subsidiary-related financing. I don’t anticipate any issues here but if there are, the company has cash on hand to simply pay it off.
While the company’s commercial property segment has shown absolutely no signs of weakness with 96% occupancy and new leases being signed at rates above the current avg in-place rents, one can not help but worry about this area. Most of Wall Street has disappeared and now the energy sector is witnessing unbelievable contraction in such a short time. Brookfield, as one of the largest landlords in Manhattan and with a good foothold in energy-related cities like Calgary and Houston, would seem to be affected by this turmoil.
