Random ThoughtOn a relaxing Sunday afternoon, a quick random but long-winded thought.
I recall being confused as to why BPY purchased GGP in 2018 directly, however, the acquisition of Forest City was completed by one of the BSREP funds for BAM's institutional fee-paying clients of which BPY subscribed only for a small slice of the equity. I would have viewed both of these asset plays as fitting under BPY. And I viewed the BSREP funds as a slice of the equity.
In a interview with Bloomberg recently, Bruce Flatt said that the acquisition of GGP was within BAM's "permanent capital" (ie BPY) and they could take a very long term view . While he did not mention Forest City, I then conclude that the purchase of GGP was viewed as very high risk and they did not want to expose their prized institutional clients to such risk wheras Forest City was then viewed as low risk and a stable current return.
My initial investment in BPY back in 2018 was under the premise that BPY was the largest and most important asset base to BAM and Brian Kingston as CEO was going to bring prominence back to the real estate arm of BAM after years of lagging the other subs such as BIP and BEP.
The bad news is that BPY is not the entrepreneurial business I expected and CEO Kingston's first job is to not disappoint their fee paying clients (as opposed to their fee paying subs).
The good news is that Flatt has a long, long term view on BPY and will stand behind it FOREVER. And value creation will be via trading the BPY units either through BPY or BAM.
Still long,
Vette