Entities prior to the current Brookfield structure did run into trouble in the 1980s (real estate crash). But to our knowledge Brookfield has not missed any preferred payments following its corporate reorganization decades ago. It has defaulted on some specific office properties that were managed for third party funds (this garnered a lot of publicity recently but the funds took the hit, and not Brookfield itself. But it does lower fee potential on third-party managed assets). But...these preferreds certainly have to be considered higher risk. While Brookfield has a reputation to uphold, it is not legally obligated to these preferreds. BPO is a separate legal entity. In a worst-case scenario, we are quite certain BN would save itself over saving BPO. We do not see this as 'likely' but is still a possibility. The price of BPO prefs reflects some, or all, of this risk, in our view. The office market is certainly under siege, and this is why yields are high. We would be cautious on price predictions, though. Four years is a very long time and much could happen (good and bad).
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