Q: This Brookfield Office preferred is trading with an over 12% yield and if I understand correctly is resetting on December 31, 2023 at a higher rate. Why is it trading down lately with rates so high and resetting so soon. Knowing that it is higher risk would you consider it a buy for its high yield. Also could it be called for a large capital gain on Dec 31.
5i Research Answer:
A call is always 'possible' but it is certainly not something we would expect this year. Investors are very worried about office vacanies and an upcoming recession. Vacancies are certainly high compared with prior cycles. We would consider these preferreds buyable as 'part' of a higher risk income basket in a small weighting. We would be less comfortable as a single holding.