Analysts Boost Brookfield Properties Target Price

Brookfield Properties Corp. (BPO) is set to report its third quarter results on Wednesday, and Scotia Capital’s Himalaya Jain is expecting a year-over-year improvement. The analyst’s forecast calls for funds from operations (FFO) of $0.40 per share compared to $0.31 last year, due primarily to strength in the company’s residential development business.

However, Mr. Jain thinks lower contributions from residential operations will lead to FFO growth of only 4% in 2009, from 6% in 2008 and 26% in 2007.

In a note to clients he said:

Despite what appears to be peak fundamental conditions for the U.S. office market, we believe BPO’s office segment should generate higher cash flow as in-place rental rates remain materially lower than current market rental rates.

While acknowledging that Brookfield may not look cheap compared to some asset classes, Mr. Jain thinks the current share price represents “a rare opportunity to buy into what may be one of North America’s premier real estate portfolios at a reasonable valuation.”

He boosted his price target to $28.10, and Brookfield remains Scotia’s top large cap pick.