My last purchases included 3 major oil giants XOM, BP and RDSA each with ~1 kEUR. So for now I’m full in energy sector. Now looking at other sectors like Utilities and REIT as these are the fields where big yields live.
So my second REIT and this time it is a global player – Brookfield Property Partners. Bought 55 shares for 18,23$ paying 1.013$. Company pays massive dividends (even for a REIT) of 0,33$/quarter and that land to high post-tax (-30%) YOC of 5,3% bringing additional +51 USD or +46 EUR annual dividend income breaking the 750 EUR forward dividend mark for us 🙂
Fell in love with their asset type (office 41%, retail 43%, other 16%) and geography diversification with prime RE assets in major world capital cities like NY, Toronto, London, Berlin ect. and asset value close to 200 bn$. Now on to company financials. With equity of 45 bn$ and assets of 109 bn$ equity ratio stands at 41%, which is a bit low for a REIT and should be around 50%. NetDebt stands at 53 bn$ (55-2) and company generated EBITDA or NOI in RE companies case is ~4bn$ so leverage is 13x, very high. My Baltic REIT Baltic horizon has equity of 50% and leverage of 11x so BPY is a more risky investment, but that’s what you get for a higher return. I like BPY strategy of delivering. Company acquired GGP at end of Y2018 and now sells some of its assets to bring down the debt level. After GGP acquisition BPY generates more NOI from retail then office and this is what I bit don’t like. I’m into office more then retail as retail is very exposed to e-commerce shift. First 9mo result show positive trend of deleveriging and improvement of debt/equity. Financial debt declined from 67 bn$ to 55 bn$ on the same time keeping the equity in similar level 46 bn$ and 44bn$, hence Debt/Equity ratio improved from 1,46 to 1,25 and on it’s way to preferred 1,0. NOI is growing so in combination with deleveriging all should be good for BPY and this is why I jumped in 🙂
What do you think about BPY?