The global Brookfield Office Properties has reported a rise in its first-quarter income due to better rental conditions in the US and its Australian office assets.
This will augur well for its planned $US900 million property trust that it announced last month. It will be created through the distribution of a special dividend to shareholders.
Under the plan the group, which owns Multiplex in Australia, will place a majority of its commercial assets into the new trust as part of its consolidation of the business units.
One of Brookfield's biggest asset is the skyscraper at 680 George Street, Sydney, which is anchored by Ernst & Young. But that tenant is vacating in two years to take up the anchor tenancy at the Mirvac-owned 190 George Street, which is to be redeveloped.
It is expected Brookfield will look at tenants in the technology or government sectors when it re-leases 680 George Street.
The group said it was not looking to convert the property into residential apartments, as per market speculation.
It said each shareholder would receive one new BPY unit for every 17.42 shares of Brookfield .
The dividend is estimated to be valued about $US1.45 per Brookfield class A or B share, or about $900 million in the aggregate.
The group said over the weekend that its commercial property net operating income for the first quarter of 2013 increased to $US349 million, compared with $312 million in the first quarter of 2012. The same property net operating income during the first quarter of 2013 increased by 2 per cent compared with the same period in the previous year.
Common equity per share at March 31, 2013, increased to $20.08 from $19.80 as at December 31, 2012, and total return of 62¢ per diluted share represented a 3 per cent return on opening common equity per share.
"The first quarter of 2013 marked a new phase of growth for Brookfield Office Properties as we advanced two major developments in our largest markets: Manhattan West in New York and the second phase of Bay Adelaide Centre in Toronto," chief executive of Brookfield Office Properties Dennis Friedrich said in the company's statement.
"The quarter also saw tenants beginning to transact with more confidence, which is exemplified by our strong leasing results."
The group also announced on the weekend that it had entered into a definitive merger agreement with MPG Office Trust, which has assets in Los Angeles.
Mr Friedrich said this proposed transaction provided the opportunity to combine and operate a large portfolio of the highest-quality assets in a major US gateway city.
"Downtown Los Angeles has all the attributes of a dynamic urban market, including modern transportation infrastructure, a growing residential population and access to a diverse labour pool," he said.
DTLA Holdings will be sponsored and managed by Brookfield, which will own about 47 per cent of the fund and include institutional partners who will hold the remaining approximately 53 per cent interest.