| 2 REITs to buy for growth and income Here are two real estate investment trusts to buy for growth and income. Both REITS’ units trade at attractive discounts to their net asset values. Brookfield Property Partners (TSX—BPY.UN) Brookfield Property Partners faced unprecedented challenges in the second quarter due to COVID-19. Company funds from operations, or CFFO, for the quarter were down nearly 51 per cent year over year. CFFO was impacted significantly by the widespread closures of the company’s hospitality and retail assets due to the global economic shutdown. Brookfield Property Partners is one of the world’s premier real estate companies, with about $86 billion (all figures in US dollars unless otherwise noted) in total assets. The company owns and operates iconic properties in the world’s major markets, and its global portfolio includes office, retail, multifamily, logistics, hospitality, self-storage, triple net lease, manufactured housing and student housing. For the second quarter ended June 30, 2020, Brookfield’s CFFO was $178 million, or $0.18 a unit, compared with $362 million, or $0.38 a unit, in the same period of 2019. The core office business generated CFFO of $126 million, down 33 per cent from a year earlier. The decrease was primarily attributable to a transaction gain of $38 million in the previous period and a decrease in contributions from parking and retail operations. Core retail operations CFFO fell 18 per cent to $140 million. Here, results were impacted significantly by widespread mandated closures in the US retail portfolio. We believe Brookfield’s units are undervalued at their current quotation. The units also possess a high yield. The company’s chief financial officer has said that rather than the distribution being too high, the unit price is too low. Though its payout ratios are high, we think the company, with the backing of parent Brookfield Asset Management, will probably maintain the current payout. |