Brookfield Office Properties Ltd (BOX.UN-T)

The market is avoiding office real estate, uninvestible for now. The preferreds should be more resilient, because Brookfield is a strong company.

They have a cash offer from Brookfield Property Office (BPO.UN-T) at $32.50. He would say that this is the current valuation, and they will probably be successful. He would take the offer as they are not going to be any more liquid.

BPY-T said they wanted to buy the remainder of the company at around the current price. It is pretty much a done deal. He does not think you get much more out of it.

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.

(A Top Pick Sept 11/15. Up 28.16%.) Doesn’t think this is done yet. Has never sold a share. Still undervalued. This is the best office real estate that you can find in Canada.

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%.

He sticks with BAM.A-T. He does not need to be a third layer down. Some year there will be a press release that BAM.A-T has taken out what they don’t own of BOX.UN-T, however.

(A Top Pick Sept 11/15. Down 2.28%.)

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%.

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.

(A Top Pick Aug 12/14. Down 4.73%.) Trading at a massive discount to NAV. At some point he feels Brookfield Property Partners (BPY-T) will eventually take this in. This represents probably the highest quality office portfolio in Canada, largely urban properties that have really good tenants, where you don’t have to worry about a significant increase or decrease in occupancy.

It is very high quality office real estate. But we are building a lot of these buildings in Calgary and Toronto. It looks cheap on earnings but he is not sure he knows what the earnings will be as new office properties come online in these cities.

It will likely be taken in by BPY.UN-T. NAV is $31/share. It is a good entry point. It should be well positioned to withstand the increase in office supply over the next few years. The dividend is sustainable.

(Top Pick Mar 27/14, Up 17.96%) The highest quality office properties in Canada. When leases come up for renewal they are getting 15% increases in the rents. He is hanging on. BPY may buy it in 12 to 18 months.