Brookfield Property Partners

BPY.UN-T

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.

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%

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.

Diversified play, but you're getting some of the best quality office towers and malls in the world. And you're getting the smart Brookfield operators. Hasn't done much since it was spun out. Yield is 6%, so you're getting paid to wait. Brookfield doesn't like to lose, so they may have to revisit the form it's in.

He bought shares in the last couple of months. A core chunk of it is retail, a core part is office and then there is a third private equity part. The office segment is performing really well but the retail segment has been affected by the forever 21 failure and some others. It is trading at a pretty significant discount to net asset value. It is a great place to be.

Why the higher yeild? He prefers to put money in with the parent instead. BPY.UN-T holds a lot of US malls and offices. There are supply issues in some of those key markets and the capital insensitivity is creating some uncertainty, resulting in the higher yield he thinks. The leverage is also pretty high. It will do well in the long run and they hold high quality assets. But he doesn't think you need to be there.

6.5% yield. The market put them in the penalty box due to an acquisition. (Analysts’ price target is $30.85)

The chart shows a possible head-and-shoulders, but it hasn't completely that formation yet (since early 2018). A neckline around $28. If it breaks that level, it is very positive, but he isn't sure it'll happen. Wait and see. If it doesn't, exit.

Defensive stock? Of all the Brookfield entities, BPY.UN-T is the one he likes the least. They have had a strategy of buying older shopping centres and malls that have not been doing well. He does not buy into the theory they are buying at lower prices. He would hold BAM.A-T instead.

Optimal period to hold is July - October. Seasonal strength is in third quarter. Could argue it's started to break down. A rather pronounced move lower. Double top suggests $4 lower if it doesn't hold at $23.43. Don't pursue right now.

He likes that they can refinance at lower interest rates. He likes the Brookfield empire, and its CEO came from real estate. It's been volatile, the geographic diversification helps. It has absorbed Brexit's impact; many banks have already migrated out of London to Dublin and across Europe.

The dividend is about 6.5%. It ranks 129 out of 700 stocks. The big concern is that over the last 3 years it has a -7% compound growth rate on cash flow. 0.71% ROE. There are better stocks even within the family.

Trades at a 34% discount to NAV, which he has never seen. They hold offices and retail spaces in the US, UK and Canada. A great portfolio. They do a great job of accreting new assets. (Analysts’ price target is $31.13)

Really likes it. Trading at a big discount to NAV. Well-run. Tremendous value and pays a wonderful dividend. You hold the Brookfield subsidiaries like this for income. This exposes you to an undervalued, diversified REIT.