Brookfield Office Properties Inc T.BPO.PR.A

Mean reversion

[indoubtgetout]

Amazing sell-off on all BPO related prefs!  Hard to imagine BAM is having major financial issues in their property division.   So either the market is correct or this is a fantastic buying opportunity?  What is likely is an institutional investor is bailing on BPO and therefore is a price taker.  The broker desks may have known about this so they have stood aside and avoided this slide.  Mean reversion could see this pref trade back up to $20 over the next few quarters.

[timetolearn]

Yeah preferred are never known for their liquidity. So any willing seller will have to hit any bid that is out there. Market maker are not stupid and can easily just walk it down $0.20 on every bid on 200 shares. So someone trying to sell 5000 shares will just ended up knocking it down multiple dollars. Given BPO is BPY are essentially the entire real estate arm of Brookfield, my opinion is they

[indoubtgetout]

Unlikely that Brookfiled defaults on their properties that they own in BAM - which owns BPO.   So the BPO preferreds are likely to be ok  - they are still rated P3 by DBRS and have not been downgraded.    The LA property situation is isolated IMHO.   That said, where there is smoke sometimes there is fire so the BPO's prefs by being sold off aggressively by

[CrazyTrader]

Again, I don't think BAM or BN are guarantors of BPO's preferreds.      The focus should be on the guarantors of BPO's preferreds, and interest rates.    All just my opinion/view/thinking.... could be wrong.

[timetolearn]

BPO are a subsidiary so it wont be guaranteed by BN I dont think. The LA default is under a special subsidiary called DTLA, which is its own enitry with common shares and preferred shares. Obviously if all office REIT goes into the shitter, BPO wont be spared !

[CrazyTrader]

Brookfield subsidiary defaults on two Los Angeles office buildings | MarketScreener Plus I don't think BAM or BN are guarantors of BPO's preferreds...could be wrong, my english isn't that great, but if you want to know, info is online at sedar.com All just my opinion, view, thinking, interpretation, I could be wrong

[chuck84]

whats really hard to understand is how BN corp maintained a debt/capitalization of 17% and have termed out its debt to 13yrs at a great rate. ie they fixed on the lows meanwhile BPO and other operation subs have debt/cap more in the 50% range which in and of itself is not overly levered BUT the magnitude of the variable rate debt is as another poster reported closer to 60%. however that number

[timetolearn]

yeah they can suspend the dividends on the prefs, but my understandings are MOST of them are cumulative pref. So yeah may not collect it on time, but will still collect at some point, unless BPO goes bust. Yet people seems not to care, and just sell sell sell. Mind you most office REIT are getting plummeted in the last few months as well. Recent news of office vacancies certainly add to the fire

[chuck84]

i messed up on BPO corp maturities. there is one this july but there is little chance BPO defaults on its senior unsecured at this time way i would look at it is there are countless properties in portfolio. some with zero equity, some with plenty of equity. dtla may not be last of the properties they put to mortgage holders but there is still a mountain of equity in the "good"

[timetolearn]

I look at all the office REITs and they were all hit pretty hit in the last few months. I think the DTLA defaults and plus all the news re vacancy recently make investors look at the BPO prefs just like common shares, and thus decide to sell it off aggregsively. So the pref does not enjoy upside like common shares, but certainly fall as hard for sure...

[CrazyTrader]

timetolearn, can you post the canadian tickers of the reits you looked at, thanks

[timetolearn]

D-UN, AX-PI TNT-UN (recent div cut) SOT-UN (recent div cut) CRR-UN FCD-UN INO-UN (div cut) Just to list a few. Even the better diversified ones are down like 20% or more. The sell off accelarates since SVB collapsed as commerical REIT is the next "big" area people are worried about, which ties in to regional banks funding most of their debt.

[BrainNugget]

Morgan Stanley analysts are forecasting something ‘worse than in the Great Financial Crisis’ for commercial real estate (yahoo.com)

[CrazyTrader]

Thanks timetolearn.    The Crazy Trader that I am, I took the plunge and picked up some shares of one of the REITS without much DD. Placed small buys on BPO also, but didn't get filled.   

[CrazyTrader]

I sold my reit.... also not renewing my buy orders on BPO.  If I miss the run up, so be it.   Will see if my mood changes, but for now just watching.