Brookfield Office Properties Inc T.BPO.P.A

RE:Mean reversion

[chuck84]

whats really hard to understand is how BN corp maintained a debt/capitalization of 17% and have termed out its debt to 13yrs at a great rate. ie they fixed on the lows

meanwhile BPO and other operation subs have debt/cap more in the 50% range which in and of itself is not overly levered BUT

the magnitude of the variable rate debt is as another poster reported closer to 60%. however that number drops to 30% once derivative hedges factored in

the entire story of past couple years was the inevitable explosion in rates. BN corp seemed prepared for it but left BPO highly vulnerable to it. make so little sense they could have messed up so.

and to make matters worse they do indeed have this lumpy maturity schedule in this "window" of high short rates (that curve at least suggests will last another yr or so)

so yeah, makes sense now about the freefall in the prefs BUT

BPO corp did just do the large green bond offering and have no other maturities till 2025 so I dont see any default at the BPO corp level. may well be some properties put to the mortgage holder but will be case by case.

worst case i suspect is suspension of pref divs to ride out this storm. we are no where near the point of negative equity at BPO given debt/cap of 55% imo