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

TOP PICK

Brookfield made a US shopping centre acquisition and he thinks they will turn it around. A great value as it trades at a sizable discount to NAV. A very safe payout ratio, he believes. Yield 6.96% (Analysts’ price target is $31.07)

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BUY ON WEAKNESS

He is not an advocate of averaging down. We have four touches at the recent lows. Some indicators are just starting to turn up. If you can pick it up at $24.25 you will be okay.

WAIT

Dividend nicely covered, at 50% or more. Yield is good. Stock trading between two technical points, which are both discounts to book value. Risk is $23 to the downside, and about $28 on the upside. He prefers to buy on support, instead of in between. Nothing wrong with it, but earnings estimates are oozing downward a bit, and that concerns him. Upside potential is more than 80% on FMV. (Analysts’ price target is $31.07)

HOLD

Is a well run business that survived during the peak in interest rates. They have trophy properties around the world. The company should hold together during a recessionary pull back. He would continue to hold.

DON'T BUY

When to take a second position after buying a first? He's shorted this in the past. This scores in the middle: OK price momentum, but the valuation struggles. 25x EBITDA with few cash earnings. It's fairly levered. Pays a 7% yield with an okay payout ratio. He's neutral on it. Wouldn't buy it.

BUY

Within the Brookfield group he usually prefers to own the parent. From a yield perspective this is a reasonable place to be. A well run company. A buy at current levels.

BUY ON WEAKNESS

Nothing wrong with this and the properties are fantastic. He does not own this as he feels we are in late cycle. Rent renewals may become more problematic if the economy slows. Just a little too expensive right now.

BUY

Which Brookfield stock to buy? BIP.UN this morning announced it raised $350 million of which BAM.A-T invested $250 million. But BPY is the cheapest Brookfield stock and pays over a 6% dividend. BPI.UN-T is a hold.

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COMMENT

Cheap enough, trading at almost a 50% discount to book value. Balance sheet hasn't gone anywhere for years. Earnings forecast is drifting lower. Almost as though the market's said, Who cares? Income might be good, but what's the driver to get it moving? Yield is 5%.

COMMENT

In isolation BPY.UN-T is a great name. It trades at a large discount to NAV and pays a yield of 6%. He looks at other real estate stocks and he would favour owning the parent BAM-N. He prefers the parent as they collect fees from all the other entities. Now is a good time to own BPY.UN-T due to the discount to NAV and this lower interest rate environment. He would be cautious that they do hold a lot of retail shopping centres, which may require capital investment in the future.

BUY

Rate cut opportunity? He does not own any REITs, but is looking closely at this one. It is extremely well managed and has great properties. It looks like very good value and if Fed rates do drop, it would benefit. (Analysts’ price target is $31.00)

PAST TOP PICK

(A Top Pick Jun 21/18, Up 5%) Their payout ratio is still a high 117%, but there's still decent growth that should improve after they sell some assets. The last few quarters show promise in mall re-positioning. It's still a cheap name at 16.5x earnings vs. other REITs.

BUY

He likes it at this level. The longer term downtrend appears to have been broken and the stock is near the 200 day moving average. He likes the risk-reward at this level and the healthy yield, but would limit downside risk to levels just above $24. Yield 7.0%

BUY

Recession fears hitting BPY.UN Lower interest rates help them, because their properties are leveraged. The Brookfield group as a whole has a very long-term horizon, and an investor should buy with that long time frame. This will do well in the long, long term.

DON'T BUY

He admires BAM.A-T and their holdings. If you are reaching for yield you may look more for BPY.UN-T than BAM.A-T. We are seeing cap rates at relatively low levels, meaning properties they are buying are expensive. He would not look at this one within the group.

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Brookfield Property Partners (BPY.UN.TO)