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PREVIEW-Brookfield Q2 FFO seen dipping

 * Brookfield Properties second quarter results due July 29
 * Funds from operations seen at 36 cents per share
 * Diverse portfolio, outlook in New York market key
 (In U.S. dollars, unless noted)
 TORONTO, July 28 (Reuters) - Brookfield Properties BPO.TO
BPO.TO, one of Manhattan's biggest landlords, is expected to
report lower earnings on Wednesday, and offer clues to how its
office holdings are faring during recession.
 Analysts expect funds from operations of 36 cents a unit,
according to Reuters Estimates. Funds from operations is a real
estate benchmark measure that strips out the distorting effects
of depreciation and other factors from earnings.
The U.S. office market vacancy rate reached 15.9 percent in
the second quarter, the highest level in four years, and rent
fell by the largest amount in more than seven years as demand
remained weak, a leading real estate research firm said this
month. [ID:nN06270309]
 Those numbers do not bode well for office landlords such as
Brookfield. But the property company has a diversified
portfolio and long term leases that do not expire all at once.
Brookfield has office towers in Washington, D.C., Boston,
Denver, Houston and across Canada.
 "Even if the market is tough, it's not like the vacancy
rate is going to go to 10 percent from 5 percent in six months.
They're not impacted in such a material way in the short term,"
said Mark Rothschild, real estate analyst at Genuity Capital
Markets.
 Questions remain on the fate of a large lease to Merrill
Lynch now that Bank of America has acquired Merrill. Last
quarter, Brookfield Properties said it is still in discussions
with the company, a key tenant that occupies about 2.6 million
square feet at World Financial Center in New York.
 "But that doesn't expire for a few years. So while we're
not expecting any good news, we're not expecting anything
supermaterial from their U.S. office market portfolio," said
Rothschild.
 A relatively bright outlook from Manhattan office landlord
SL Green Realty Corp SLG.N may give some clues on the New
York market. [ID:nN28178997]
 The table below shows analyst per share forecasts for
Brookfield's results, as polled by Reuters.
 Q2                FFO (per share)               
 Mean              $0.36
 Median            $0.36
 High              $0.39
 Low               $0.33
 Sample size       11
 Year ago          $0.40
 (Reporting by Ka Yan Ng; editing by Janet Guttsman)


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