Brookfield Office Properties Inc T.BPO.P.A

Looking for insights from long-time BPO peeps

[SONOFFERGUS]

Hi all.  I have been reading your posts with great interest as I have been nibbling on BPO.PR.A and N, and now am doing a deep dive to justify bigger bites and perhaps other series.

Might any of you have some insights on these Qs -- or anything else that comes to mind?:

1. Why do the C, E, G, and I series with minimum coupons trade at such a high premium to those without when the value of the floor is overtaken by the value of the par fixed spread on current price?  Those series will have higher dividends only if GoC 5 goes very low very soon, which seems unlikely. A minimum coupon is great if the issuer is blue chip, but for a distressed issuer, why not buy the cheapest series and not ones with theoretical value way down the road? Why are hedgies not shorting these against the cheaper ones?
2. More broadly, aren't these significant price differences a great indication that the "market" does not foresee a problem with the dividends? Someone posted about the BPY US prefs trading much higher and how puzzling the price difference is given that BPY prefs = BPO prefs in a liquidation.  Am I missing something?
3. Why do the Ts trade so much higher than the other series that also don't have floors?  Is it because buyers focus on current yield and ignore (or are ignorant of) the coming resets?  Series A in particular, resetting in Dec, seems a much better buy.  If the anser 
4. Is there a way to gain insight on NCIB buying before the monthly report (and does anyone get this pay-walled info)?  Is there a broker known to run the buybacks for BPO?  I've been watching series W X Y since they are so so illiquid and they have a 1000 share daily buyback cap, but can't see a pattern so far.  I see from the NCIB application that public float is less than issued, so does that mean that BPO has previously bought back these shares?
5. Have you seen any significant price moves around ex-div dates?  It seems to me shorts would rather not write those cheques unless absolutely necessary.

Thanks so much!  My children will be pleased if my greed for 20% dividends is justified so they can fly first class.

John

[wynner]

Hi John. I bought some BPO.PR.A recently too. Like you I compared them favourably to the T as they are almost identical except for the fact that the A will reset in December and the T has just reset at a higher rate. I don't see the rates falling that fast this year either. The $2 difference is not going to last IMO. Also the X trades at a discount to Y and W even though they are going to have

[wynner]

interesting that Faifax FFH.PR.C resets in December and has a spread to GOC of 315 . Just like BPO.PR.A. The price is $20.21 . as opposed to $8.80. Rated S&P P-3M  (junk) Makes me want to LOL.

[pierrelebel]

"I don't see the rates falling that fast this year either. " I agree as I project a "Canada 5 year" rate of 3.00% to 3.25% by December 1st, 2024 when the "A" rate will be reset. "The $2 difference is not going to last IMO." Slight difference of opinion here.  In the last twelve months, the spread between A and T has been about $2 near the high

[SONOFFERGUS]

Hi Pierre! That is a great insight.  Some screens show dividends on a TTM basis, giving even more time until all investors are looking at the same yields. I wonder if the inverse holds, where investors are trading off of historical yields when reset dividends go lower.  Hmmm. There are so many opportunities in prefs for those willing to roll up their sleeves!

[SONOFFERGUS]

Hi.  Thx for your response. I'm glad we're on the same page -- hopefully it's the right one! I haven't bought pref shares in decades, so I was lucky to miss the rise and fall of fixed resets.  Now I'm looking at all these unloved stocks like a kid in a candy store. Since you swim in floating rate waters, do you have any thoughts on why floaters from high quality

[wynner]

Hi Fergie. Those floaters that are paying 70% of Canada prime rate (5.05% @$25) have been down so long since prime cratered that they don't know what up is. We need more buyers than sellers. PWF has a good credit rating too, P1-L I am looking up at those with my BPO.

[SONOFFERGUS]

Lol well said.  PWF can't be doubted as a credit.  Sure, there should be a discount for illiquidity and no maturity, but 50%?  Insanity.  Hard not to buy more and more and more.

[pierrelebel]

At $12.90 PWF.PR.A is not such a bargain in my book. Current annual dividend is $1.26 ($0.315 per quarter) for a yield of 9.77% and we all know it will come down as interest rates (including bank prime rate) come down. Looking at the long term chart, the last time these preferred shares traded at par was 2007/2008. They traded for a short time above $20 in 2019 when interest rates were almost 0%

[SONOFFERGUS]

I get liking resets better.  I do too, with a bias to 2024 resets. What I'm missing in this market is why a floater would trade so far from par.  It's not a credit issue (oh hi BPO).  It is a structure issue to a point since the only way to exit is through another buyer, but... SLF.PR,K $21.00 at offer pays t-bills +2.17%.  Rated same as PWF but not cumulative. &

[BrainNugget]

BPO and ECN preterred , is it like casino play money to you Pierre? As for ECN why didnt you go for the bonds (debentures) instead ? they have 3 sets maturing from 2 to 4 years with  yields to maturity ranging from 15 to 17 %

[pierrelebel]

"As for ECN why didnt you go for the bonds (debentures) instead ?" Simple!  Taxes! Dividends are eligible to the dividend tax credit, interest on bonds  or debentures is not.  In Ontario, the difference is substantial. Take a look at this LINK.

[BrainNugget]

those ECN bonds are so much below par that most of that huge yield to maturity is capital gain, the coupon is only 6%. Capital is better protected in a bond but it may not apply in something like ECN