Brookfield Office Properties Inc T.BPO.PR.P

BN Results

[Carena]

Good evening,

BN reported results today and my takeaways are as follows:

(i) I think the year to date $800 million in share repurchases was mentioned like 4 times in the shareholder letter.  This sends a signal of confidence to me in the organization....20 million shares at an average price of $40/share. 

(ii) Stated the real estate market is coming back and no bad news on refinancings which I find incredible.  But this is solid news for our BPO pref shares!  Bruce Flatt promised a quiet year for refinancings and that is what we are gettng.

(iii) I had noted in previous posts that Bruce Flatt was sending signals late last year that he was for the first time ever, publicly talking about succession for him.  This shareholder letter clearly established who the future leaders are with Connor Teskey at BAM becoming the heir apparent.  No surprise as there was a big spread on him in the press a couple months ago.

(iv) I guess it is a good thing but I am amazed that when they talk about the distributable earnings, they list out BAM and Wealth Solutions (ie Insurance) and then they lump BPY, BEP, BBU and BIP into "Operating Businesses".   I do not see much reason for these units to continue to operate as public companies in the future and I would guess the long term plan is to privatize all these operating businesses.  That is, buy huge chunks of BN through share repurchases and then re-issue these shares to privatize these operating businesses at higher BN share prices.  I happen to also think these businesses are key long term assets for BN but their collective balance sheets have been tapped out and they are paying the price of higher interest rates.

My point is, Bruce has been crapping on public markets for a couple years now, and these are all positives to ultimately get the $25 par value out of our BPY/BPO prefs.  In the meantime, we clip away 10% to 15% coupons!  

Have a great night,
Carena