Brookfield Property Partners (BPY.UN.TO) Buy,…

Brookfield Property Partners (BPY.UN.TO)

23.29

-0.15 (0.64%)

as of Jul 26, 2021, 8:00:00 pm Market Open.

371 watching

HOLD

Anything with this brand name is generally good. They have a strong capital structure and management is aligned with unit holders. They just had a positive bump on their share value as they replaced Encana in the Index. They own office, retail, enclosed malls (the premiere assets in the US). He thinks there assets are undervalued right now, he believes. Trading at 18 times AFFO, it is cheap compared to its peers.

DON'T BUY

No question this is deep value. Their NAV is likely $27-28US (for the US BPY stock). But it'd been deep value for many years, and he doesn't see a catalyst to service that value. Some shareholders have lost patience. They're challenged because they own a lot of high-end malls. Some questioned them buying GGP Inc. last year. They have office buildings in New York and London, decent assets. Not great governance, a given Bermuda limited partnership. Buy BAM instead, which owns BPY. Nice dividend, but this is likely a value trap.

DON'T BUY

It's been underperforming for a while. BPY has now broken slightly below support level, which is not a good sign. Chart shows lower highs. a bearish sign. Seasonality is early-May to October.

STRONG BUY

You almost can't go wrong owning a Brookfield stock. They're one of the smartest managers in the world. They own so many assets and are very good at what they do. They are accretive in whatever they buy. BPY trades 15% to its NAV; it never trades this low.

COMMENT

It's his worst-performing REIT. Less than half their holdings are in retail malls. He's not worried about this, because those malls are an opportunity.

COMMENT

He prefers owning the parent, BAM. BPY owns US malls and New York City offices, both high quality assets. But at this stage of the cycle, those properties will demand a lot of capex. A few years ago, BPY bought a bunch of malls from GGP and will make a lot of money of them down the line, but not immediately.

DON'T BUY

BPY has been stuck and he thinks it will continue. They are high quality and are cheap in terms of value. However, it suffers from its relationship with the parent. Their assets are office in London and shopping malls. He thinks though when they privatized assets to the parent they did not pay fair market value. He thinks you should own BAM instead as they collect fees instead of paying fees like BPY.

COMMENT

It’s good value. You could class this as a laggard because they own significant mall assets that have a lot of negative sentiment. However, the portfolio is half mall and half office space. The mall segment is high quality and believes they should be able to turn around. It’s well positioned. 6% yield.

BUY

BAM.A-T is one of his largest holdings. He can't own them all. BPY.UN-T believes they are undervalued by at least 50%. Maybe they will change to a corp. It's not too late to own it if you want to own real estate.

COMMENT

It's been consolidating and rangebound. If it breaks above $27, this will enter a new, higher phase.

BUY

Brookfield property is where you want to go for the dividend. BIP.UN is more for growth. The dividend from the property side is quite safe and he would recommend it. Both are good company stocks. He likes the group in general.

BUY

Real estate you don’t want to be heavily in if rates rise but there is a cap on how much they can rise. About $24.50 there is support. He would be comfortable buying it today even if you only capture the 7% dividend.

WEAK BUY

It is the global real estate vehicle for Brookfield Asset Management. You are buying malls and office buildings. You can buy this at a 5.9% cap rate. You can buy others at a better cap rate. This is a great management team but he sees better options than this.

DON'T BUY

Undervalued? He does not agree that it is undervalued. You don't want to bet against them as they are strong managers. At 24 times EBITDA and high leverage it is just too expensive for him. The payout ratio is not outrageous, but there are better picks in the REIT space. Yield 7%

BUY

They aren't growing as much as the market wants. This is because of issues with London, and Manhattan real estate. They are set up well for inflation with a soft Brexit. Turn around in Manhattan as well. You get a good distribution and it is at a discount. He would enter here.

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