Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY) is one of the highest-quality real estate companies investors can buy on the market. Thanks to the strong U.S. dollar, investors can now buy shares of Brookfield Property with a 5% yield because it pays a U.S. dollar-denominated distribution.
Brookfield Property is an owner, developer, and operator of a diversified portfolio of high-quality real estate properties.
About 85% of Brookfield Property’s assets are in core trophy office and retail properties that it targets long-term total returns of 10-12%. These assets are intended to provide cash flows and capital appreciation.
The remaining 15% of Brookfield Property’s portfolio is in opportunistic investment; it targets higher total returns of 20%. These assets are either mispriced properties or properties the company can add value to. These assets are intended for capital appreciation.
High insider ownership
Brookfield Asset Management Inc. has about 68% interest in the Brookfield Property and is also the company’s general partner and manager. So, shareholders can rest assured that management’s interests are aligned with shareholders.
Access to global opportunities
At the end of 2015, about 70% of Brookfield Property’s assets under management were in the United States, 15.5% were in the U.K. and Europe, 8.1% were in Australia, China, and India, 4.7% were in Canada, and 1.5% were in Brazil.
Shareholders can gain access to a global, high-quality real estate portfolio through Brookfield Property. In its February presentation, it said, “[it has] the flexibility to allocate capital to the sectors and geographies with the best risk-adjusted returns.” Essentially, it can identify and invest in international investment opportunities that are otherwise difficult for retail investors to invest in.
Brookfield Property’s history goes as far back as the early 1920s, but it only started trading as Brookfield Property in 2013. So it has a short history of three consecutive years of increasing its distribution. Going forward, it aims to grow its distribution by 5-8% per year. Since its distributions can consist of interest and dividends from the U.S., investors should consider holding it in an RRSP.
Conclusion: Is it a buy today?
Brookfield Property has a value-oriented, counter-cyclical approach, which aligns well with the philosophy of long-term investing because value usually requires time to be drawn out. Besides, real estate investments are meant for long-term investing.
Brookfield Property trades at about $29 and yields about 5% today, which is inexpensive. If you’re investing for the long term, buying at this price would be all right. However, the company would be an even better buy on dips of 12-20% from its 52-week high of $32, indicating a buy range of $25.60-28.16 per share.