Opinions
Dennis Mitchell, CFA
Brookfield Real Estate Services
BRE-T
COMMENT
Jun 03, 2009
Stock price when the opinion was issued
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We’ve had a fantastic Canadian real estate market for more than a decade. For the last 5 years, it has really been a story of Vancouver and Toronto. This company has a good model where they receive a royalty from their agents. There is a little concern that the number of agents may decline. Great company and great strong management, but not sure how long the residential real estate cycle can last. Dividend yield of 8.1%.
An 8% dividend is about the point where he starts to get nervous about a company. If it is much higher than 8%, often the market is correct. The company has great management and a long history. If real estate gets hit, a lot of companies are going to take it on the chin. Dividend yield of 8.4%.
She owns Brookfield Asset Management, which is the parent. This gives her exposure to the success of BRE and to the broader set of assets held by the parent. BRE invest in property management across the globe, owns commercial malls and retail malls. It is diversified geographically. They have a very long-term perspective, buy assets that are distressed and repurposes them, such as repurposing failing retail malls into condos.
Prior to the release of their earnings, they have had a nice ride. Some concerns now about real estate sector. This stock took a nose dive because of earnings report. Have to be cautious with real estate now with impact of higher interest rates and housing slow down in the US. Be careful in the real estate sector. Need to be selective in this sector. Yield 7.7%.