UPDATE: ISI Group Downgrades Brookfield Office Properties to Hold

ISI Group lowers its rating on Brookfield Office Properties

to Hold from Buy and cuts its price target 8% to $18 to better reflect ML lease expiration and limited upside. ISI Group says, "Re-examining model led to a further reduction in 2013 NOI when ML lease expires Of Merrill's 4.6msf lease which expires in September 2013, BPO has released 1.2msf of space to date to tenants such as BofA, Commerzbank, and OppenheimerFunds. That leaves 3.4msf of unspoken for space at average net rents of $35psf and average gross rents (including expenses) of $60psf. Our prior model did not fully capture the expenses which BPO will pay during the vacancy although $10 of the $25psf of expenses related to utilities and cleanings can be saved while the space is actually vacant so the gross hit to BPO's bottom line is closer to $50psf." BPO closed at $17.60 a share yesterday.