Increasingly bullish economic predictions are here. Investors are banking on a resurgence of growth on the horizon. Indeed, there’s hope we may be finally approaching the end of this pandemic tunnel.
With such optimistic forecasts, I believe that rising inflation expectations will begin to materialize as a self-fulfilling prophecy. In particular, we’ll see asset price inflation, both in the price of stocks, and in the price of real assets for quite some time.
Indeed, big players in the real estate sector, such as Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM), are placing their bets this will happen. Those on the same page may want to consider BAM stock right now.
Brookfield’s underlying property portfolio impressive
For those looking for access to real estate, Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY) is one of the best ways to do so.
Indeed, BAM’s subsidiary Brookfield Property manages one of the largest real estate portfolios in the world. It includes developments like Canary Wharf in London, New York’s Brookfield Place, and more. In 2018, this company acquired GGP Inc. for approximately $15 billion. By the end of December 2020, the total value of this Brookfield Property’s portfolio was roughly $88 billion.
Investors have long been bullish on Brookfield Property stock primarily due to the quality of the underlying assets held in its portfolio. Indeed, investors who have added to their position during the pandemic have benefited greatly from a resurgence in asset prices.
Brookfield Asset Management has remained a steadfast believer in its subsidiary’s asset quality. So much so, it’s making a big bet on Brookfield Property right now.
Brookfield Asset Management is swallowing up its property arm
Brookfield Asset Management recently announced that it has reached an agreement with its subsidiary Brookfield Property to purchase the remaining shares it doesn’t own for $6.5 billion, or $18.17 per unit. The holding company has raised its offer by 10%; in January, it made an offer of $16.50 per share.
According to statements given by both companies, all board members of Brookfield Property have approved this decision. Brookfield Asset Management Chief Financial Officer Nick Goodman said that the company believes that this deal will undoubtedly be enticing for shareholders, given how efficiently it manages its portfolio of top-notch real estate assets.
The company already has a 60% ownership stake in Brookfield Property Partners, which has a market value of roughly $17 billion as of today. The deal will be finalized following a vote involving public shareholders and other stipulations.
Brookfield believes that the deal will be closed by the end of the third quarter this year. Furthermore, it has said that the investors of Brookfield Office Property Exchange LP and Brookfield Property REIT will also be involved in this deal.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.