Brookfield looks to go bargain hunting

Brookfield Properties Inc. says a third quarter profit has helped itamass a smallwar chest in order to pick up distressed commercial properties.

Brookfield, which owns more than 100 properties in a number of major North American cities, made $174 million, or 44 cents a share, in the latest July-to-September period.Thatwas a marked improvement comparedwith theToronto company's $3 million gain for the same quarterone year earlier.

Brookfieldattributed almost three-quarters of the gain in the periodto a one-time profit, worth $127 million, from the July sale of a 50 per cent interestin the TD Canada Trust tower located in downtown Toronto.

The company also absorbed an $8-million loss in the samequarter as a result of damage to its Houston buildings because ofHurricane Ike, which struck the southern U.S. earlier in theyear.

For the third quarter, Brookfield posted revenue of $718 million, a rise of only four per cent comparedwith sales of $691 million one year earlier. The company has endured the negative effects of the U.S. subprime mortgage meltdownand the consequent economic slowdown throughoutCanada and the United States.

The next year will probably be worse for developers than 2008. A survey conducted earlier in October for Pricewaterhousecoopers and the Urban Land Institute indicated commercial property valuesacross the United States will continue todeteriorate.As a result,2009 could bethe worstyear for the business property market since the Great Depression, the group said.

The report estimated that the vacancy rate in many cities, such as Seattle, will grow higher than the current 10 per cent level, a situation that bodes ill for Brookfield's buildings.

Still, Brookfield said the company hadaccumulated somefinancial resources tobuy devaluedproperties.

"With a well-leased portfolio and low near-term lease rollover exposure, Brookfield Properties is strongly positioned to maintain steady financial performance through the economic downturn. At the same time, we are working to generate additional liquidity in order to take advantage of opportunities that will undoubtedly arise in this market," saidRic Clark, Brookfield's president and chief executive officer.

Brookfield has approximately $200 million in cash and near-cash on its books currently.The company also has renewed $300 million inrevolving credit financing.