Brookfield Office Properties Inc T.BPO.PR.R

RE:RE:RE:RE:RE:RE:RE:RE:I own a lot of one bank...

[pierrelebel]

wynner wrote "Flatt cares more about his credit rating than the actual real estate. imo. Job one will be to pay down debt promptly on select prefs and debt. So it is going to happen "

I love your optimism. And I wish I could feel it.

However, from my perspective Flatt cares mostly about Brookfield Assets Management (BN and BAM), not Brookfield Assets Properties Inc. (BPO) His priority is on the mother ship.

Preferred shares in BPO are not "debts", they are part of the capital used in the business. The credit rating for Brookfield (BN/BAM) is good, the problem of credit rating is with Brookfield Office Properties (BPO) and that will not be fixed quickly.

While lower interest rates over the next two years will help, the main issue remains vacancies in office buildings, resulting in lower revenues while inflation increases expenses. As a society, we are years away from solving the vacancy problem as many "office workers" still prefer to work from home. Then, and only then, will the credit rating improve, not before.

In the meantime the well above average yields on BPO preferred shares reflect that credit risk. I expect the high spread to remain for years and my wife and I will keep enjoying those high quarterly dividends for years to come.

And, if we have to pay income tax, so be it.  It beats the alternative!