Soon after the United Kingdom decided to exit the European Union, the currency and public equity markets felt the blow. The pound depreciated, and companies with exposure to Europe or the U.K. fell. The companies that fall temporarily are the high-quality companies, including Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY).

Although the long-term effects of the U.K.’s decision to exit the E.U. have yet to be seen, the brave souls who bought Brookfield Property after the 7% dip due to the U.K. referendum would have seen their units appreciate 10% or so in a little over a month.

As an example showcasing Brookfield Property’s quality assets, its London office portfolio is 98% leased with an average remaining lease term of over 11 years. Further, less than 15% of its leases expire over the next five years.


Brookfield Property made efforts to minimize short-term volatility. At the end of June the company had over 80% of its assets hedged against the pound. With only about 5% of its equity exposed to the currency, the company is largely insulated from these short-term impacts.

Safer distribution

In the second quarter Brookfield Property’s funds from operations (FFO) per unit were $0.35–a 25% increase over the same period in the previous year. The growth was due to new investments made within the last 12 months and higher net operating income from recently signed leases in its core office portfolio, among other reasons.

Since cash distributions are paid out from FFO, a higher FFO implies a safer distribution. In the same period last year, Brookfield Property’s FFO payout ratio was over 94%. This quarter the company’s payout ratio was 80%.

Capital recycling for higher returns

Year to date, in the U.S., Europe, and Australia, Brookfield Property has sold mature assets, which largely had cap rates of less than 5% for net proceeds of US$1.5 billion. Brookfield Property sold these assets at or above their IFRS values, indicating that the IFRS value per unit should be a good indicator of the underlying value of the company.

The sale proceeds are used to fund new investments and development activities to generate higher returns. This year the company could surface another US$0.5 billion from these types of assets for higher returns.


The Brexit scare caused a 7% dip in Brookfield Properties’s unit price in the short term. In over a little more than a month, the units have more than recovered.

However, at the end of June Brookfield Property’s IFRS value per unit was US$29.75, which indicates the company is discounted by about 17%. So, income and total-returns investors alike should still find value in the company today as Brookfield Property yields about 4.5%.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

Fool contributor Kay Ng owns shares of Brookfield Property Partners.