Opinions
Derek Warren
Brookfield Office Properties Ltd
BOX.UN-T
COMMENT
Sep 11, 2015
Stock price when the opinion was issued
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This is an example of how you can upgrade your portfolio. Look for the highest quality assets that you can find in the market, and buy them because they have traded down with the market. This is the trophy real estate company in Canada. Highest quality real estate in Toronto. Dividend yield of 5.09%.
80% controlled by the Brookfield entities. This is core Class A Ontario and Calgary offices. There is strain on the Calgary side, but have very long-term leases and developments going on. In Toronto, offices continue to trade at incredibly high valuations. There is German and Asian money that is very willing to come into Canada, so there is great safety in this company. A safe investment with a yield just under 5%.
There is a bid for the parent company to take this private. Brookfield has done this many times. They put in one bid, and then they sweeten it later. He doesn’t think they are going to sweeten this one. If you have a better place for the money, he thinks you would be fine taking the superior bid and redeploy the money.
They have developments going on in Alberta, but believes they are 85% pre-leased, so in a sense, they don’t have that same economic risk. The office market in general is under strain, in that there are too many buildings going up, and not enough tenants to keep those buildings occupied, especially in Calgary. He owns the parent Brookfield Asset Management and the sub parent Brookfield Property Partners.