New York, December 04, 2012 -- Moody's Investors Service assigned B1 corporate family and probability of default ratings to Brookfield Residential Properties, Inc. ("Brookfield"), a B2 rating to its proposed new $400 million senior unsecured notes due 2020, and an SGL-2 speculative grade liquidity assessment. The outlook is stable. This is the first time Moody's has assigned public ratings to this issuer.

The proceeds from the $400 million senior note offering will be used to retire portions of the company's existing debt, including notes payable to an affiliated entity, Brookfield Office Properties Inc., borrowings outstanding under the company's various revolving credit facilities, and project specific financings, with the remainder being designated for general corporate purposes, including working capital.

The company recently issued $227 million of common shares, proceeds of which were used to retire approximately $60 million of senior notes due to Brookfield Office Properties Inc. as well as to retire a portion of borrowings under the company's $300 million unsecured revolving credit facility.

The following rating actions were taken:

Corporate family rating, assigned a B1;

Probability of default rating, assigned a B1;

$400 million senior unsecured notes due 2020, assigned a B2, LGD5-75%;

Speculative grade liquidity assessment, assigned an SGL-2;

Stable outlook.

RATINGS RATIONALE

The B1 corporate family rating reflects Brookfield's relatively short operating track record in its current configuration; complex capital structure; moderate size and concentration; the generally increased risk of a business model that incorporates substantial land development vs. a pure homebuilding model, although Brookfield has a very good track record in its land development activities; relatively thin cash position; the still recovering US homebuilding market, and the risk of potential overbuild in the Greater Toronto Area.

At the same time, the rating incorporates the company's solid positions in many of the markets it serves; healthy gross margins and profitability, augmented by its expertise in land development; and moderate homebuilding debt to capitalization, recently enhanced by a $227 million equity raise. The rating is also supported by the small amount of recourse joint venture debt, and by substantial land holdings (16.5 years of total land supply, and 15.5 years of owned land supply), which reduces its need to constantly invest in new lot inventory. While the company's extensive land holdings map to a low rating on Moody's homebuilding methodology grid, we employ a qualitative override based on our judgment that the land is fairly valued and that the Canadian housing market enjoys certain features and support mechanisms that are currently lacking in the US housing market. Moody's views Brookfield as being strongly positioned in its rating category.

The stable outlook reflects our expectations for continued improvement in the company's operating performance, including relatively healthy gross margins, combined with the maintenance of homebuilding debt to capitalization ratio below 55%.

Brookfield has a good liquidity profile, reflected in our SGL-2 speculative grade liquidity assessment. The SGL-2 is supported by the company's pro forma availability of $540 million under secured and unsecured revolving credit facilities totaling $864 million; comfortable room under financial covenants; and substantial land supply that can be sold to raise funds. The liquidity is, however, constrained by annual maturities of portions of its credit facilities through 2017, a limited pro forma cash balance of $13 million, and negative cash flow generation in 2012.

The proposed new notes, which are unsecured and rated B2, are notched down from the corporate family rating because of the significant amount of secured debt in the capital structure.

The principal methodology used in rating Brookfield was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Brookfield Residential Properties is a land developer and a homebuilder, established in March 2011 through the merger between Brookfield Homes Corporation and BPO Residential (the residential land and housing division of Brookfield Office Properties). 80% of the company's revenues are generated in Canada and 20% in the U.S. In the trailing 12-month period ending September 30, 2012, Brookfield generated approximately $990 million in revenue and $63 million in net income.

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Joseph A. Snider VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Brian Oak MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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