Of all the Brookfield companies, Brookfield Property Partners (TSX: BPY.UN) has certainly become the most difficult to place a real solid forecast on, at least for me. At the time of writing, this dividend stock paid investors around 11%, an extremely high yield for any Brookfield company. Financial markets are seemingly not believing in the ability of this Brookfield company to overcome significant market risks related to the company’s office and retail portfolios.
Office and retail real estate make up approximately half of this company’s property portfolio. I see and understand the significant trepidation many investors have right now with regards to these specific property types. I’ve been bearish on both retail and office real estate for some time now, for factors completely unrelated to this pandemic; that said, I do think the COVID-19 pandemic has accelerated the secular headwinds which have been cause for concern in the past. I do see a shift long-term, away from the traditional bricks-and-mortar retail, toward e-commerce and traditional office-type work environments to coworking spaces and work from home arrangements, which are highly likely to continue long-term.
That said, these property types are indeed only a fraction of the company’s business and are high-quality assets in desirable locations. The leverage Brookfield Property Partners thus provides to an economic recovery is high, and with the backing of parent company Brookfield Asset Management, I believe this company’s divided yield and long-term future remain solid, making this company a volatile but potentially lucrative buying opportunity at these levels.
Invest wisely my friends.
