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TORONTO - Brookfield Properties Corp. plans to sell its residential real estate assets and focus on buying up office towers around the world, beginning in Australia where it will buy a portfolio of properties from its parent company for US$1.4 billion.

The New York-based company will change its name to Brookfield Office Properties under the reorganization announced Friday.

Brookfield Properties (TSX:BPO), which is 51 per cent owned by Brookfield Asset Management of Toronto (TSX:BAM.A), plans to sell its North American residential holdings to Brookfield Homes (NYSE:BHS), which will gain a presence in Alberta, Colorado and Texas.

Brookfield Asset Management spokeswoman Katherine Vyse said the sale of its Australian office properties streamlines operations.

Brookfield Properties will add an interest in 16 office properties in Sydney, Melbourne and Perth to a portfolio that includes Brookfield Place in Toronto, Bankers Hall in Calgary and the World Financial Centre in Manhattan.

"(The portfolio) expands our geographic footprint into attractive new markets. And assembling a similar portfolio and platform over time would be much more costly difficult, if not impossible to replicate," Brookfield Properties president and CEO Ric Clark told a conference call with analysts.

The Australian market has a well-balanced supply and demand dynamic, and the potential for spiking rental rates in the coming years, while high quality assets in Canada are hard to come by, Clark said.

Scotiabank real estate economist Adrienne Warren said it is a good time for real estate investors to diversify portfolios internationally, and Australia is a top performer in the global market.

"The (Australian) economy has been extremely strong," Warren said.

"It benefits from its close ties with the booming markets of Asia ... also its banking system is one of the few, along with Canada, that held up quite well through all the problems that we've seen."

There is also a shortage of properties in Australia which tends to push up prices, Warren said.

Brookfield isn't alone in searching out global acquisitions as prospects in the Canadian market remain scarce. Last month, real estate trust RioCan said it was turning its attention to acquiring property in the U.S., particularly Texas.

As part of the change, Brookfield Properties plans to sell Carma Developers, its residential property arm to Brookfield Homes Corp. (NYSE:BHS) that already has holdings in California and Washington, D.C.

The deal has yet to be negotiated, but Clark said he hopes it will close by the end of the year.

Brookfield Asset Management, a large Canadian conglomerate formerly known as Brascan, is also active in power generation, forestry-related companies and asset management. It owns 51 per cent of Brookfield Properties and 82 per cent of Brookfield Homes. BAM has a market value of nearly $15 billion.

The Australian properties being transferred from to Brookfield Properties are 99 per cent leased.

Brookfield Properties will fund the transaction through available liquidity and from a $750 million loan from BAM, which could be repaid through asset sales, potentially of its equity interest in Brookfield Office Properties Canada or other financing activities.

The transaction is expected to be completed in the third quarter of this year.

Brookfield Asset Management shares lost 10 cents to close at C$25.78 in Toronto while Brookfield Properties stock lost 54 cents to $15.50. In New York, Brookfield Homes shares gained 12 cents to $7.45.