Bloomberg News

Brookfield Sees Slowdown in Re-Leasing of Merrill Space

August 03, 2012

Brookfield Office Properties (BPO) is falling short of its goal to lease soon-to-be-vacant space at lower Manhattan’s World Financial Center by the end of 2012, Chief Executive Officer Dennis Friedrich said.

A slowing economy and “uneven” business confidence expected to last at least through the U.S. elections are stretching out corporate leasing decisions, Friedrich said today during New York-based Brookfield’s second-quarter earnings conference call. That has made it more difficult to find new tenants for 3.1 million square feet (288,000 square meters) of former Merrill Lynch & Co. offices at the complex, he said.

“Although our level of serious activity and negotiations on that space from a very diverse makeup of tenants is consistent with what we have reported over the past few quarters, our ability to advance those discussions to executed leases has been challenging,” Friedrich said. “We haven’t given up on the goal, but I would say it’s unlikely at this point.”

Brookfield had said it wanted to have new agreements for at least 1.5 million square feet of the space by the end of the year. Merrill was the landlord’s largest tenant at the 8 million-square-foot financial center before Bank of America Corp. (BAC:US) acquired the investment bank in 2009. Last year, the bank agreed to keep about 767,000 square feet of the 4.6 million Merrill had leased. Those leases expire next year.

Brookfield fell following Friedrich’s comments. Its shares dropped 0.7 percent to $16.82 at the close in New York, after declining as much as 2.1 percent in intraday trading.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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