Investment Q&A

Q: Greetings:
On Feb 23, you said wait a while longer to sell. I have all the time and patience to wait, however, I don't want to wait until I am forced to accept $16.50. Advice now?
Thanks as always,
BEN.

Q: Hello. This stock is now trading well above the takeout offer, I believe. Should I just get out now?? Cheers

Q: Every time I've looked at BAM or related companies I see a negative EPS (over a period of time). Everyone loves the parent and most of the subsidiaries and the buyers are usually rewarded. I don't understand how this works. I can't think of many companies with a similar profile of consistent success and apparently consistent losses. Is it all about cash flow?

Q: I am holding BPY.un which is to be be privatized.
What do you recommend?
Thanks

Q: On the RBC Direct Investing web site it shows the short position of BYP.UN as 7.06%. Is that correct?

Being that there is an (almost) guaranteed offer to takeover BPY.UN by BAM is it unusual to have such a large short position in this case at this time? Aren't the shorts going to have to cover eventually and that would put upward pressure on the stock price? Your comments please.

Q: Hi 5i,

I own BPY.un and was planning on taking the BAM.A shares in the recent offer. Would it make sense to do it now?

BAM.A is trading around $CDN49.08. If you take .4 of that amount the value of BPY is around $19.63. Since BPY is trading around $21.75 it seems to suggest selling BPY now and buy BAM.A for the future (Trading costs and taxes not important). If the deal doesn’t go through, I have locked in the increase.

If BAM increases their offer by 75 cents, do you think the .4 of a share would change?

Your thoughts would be appreciated.

Thanks
John

Q: Hello 5i Team
Further to BAM takeover of BPY, I looked back at the BPY takeover of Brookfield Canada Office Properties (BOX-UN) in 2017 for a similar timeframe:
January 23, 2017 takeover at $30.10 announced
April 20, 2017 revised takeover price of $32.50 announced
June 30, 2017 offer closed BOX-UN delisted
Therefore do you see the following timeframe to be reasonable:
Revised takeover price announced either mid march or early April 2021
BPY unit holders would receive the March 31, 2021 distribution
Completion of takeover prior to June 30 distribution payment (i.e. unit holders will not receive June 30 distribution)
Also noted at the time BPY increased their offer by approximately 8 % for BOX-UN – therefore would an increase from US$16.50 to the range of US$17.50 to US$18.00 be considered reasonable?
Thanks for the great service.

Q: I have 2,000 shares of BPY.UN in my RRIF account. Is it meaningful to transfer that holding to a US RRIF account to save conversion fees on dividends and more importantly on the cash from the takeover by BAM?

Q: I have not seen any time-lines related to the proposed minority take-out "proposal". Do you think that it would be possible to complete the transaction in 2021 or will it likely slide into 2022. Thanks

Q: Regarding the preferred share offer. The option of 0.66 of BPYY is based on a par value of US$25 x 0.66 =$16.50. BPYY is currently trading at US$24.59 and has a 6.61%dividend. This effectively values BPY at US$16.23. So you have the choice of getting $16.23 for something worth $16.87 (all US) Please tell me if this calculation is correct.

Q: What do you think the chances are of an improved offer from here for BPY. I’m considering selling my position for a small loss and buying BBU. I do realize they they are different types of business. Thanks

Q: I had bought BPY for a number of reasons including the eventual return of mall traffic, the fact that it had room to run to get near to its pre-covid price, the dividend and then of course, having Brookfield management behind it. The closest replications I can find are Simon Property Group and SRU in the U.S. and Canada respectively. Can you speak about their payout ratio and management quality, and especially their main risks in the medium term. Thank-you.

Q: According to SA the BAM buyout does not extend to the Canadian issue above. Assuming this is true, do you think the US side buyout changes the risk of a dividend cut, the risk of which is being floated in many quarters? Thanks.

Q: I have a position in BPY that has finally came back to my initial purchase price after the recent news. Is it wise to sell now or hold and wait for buyout. If one is to hold shares, what would happen to the shares when the buyout finalizes?

Q: Hi Guys
I always thought the book value of BPY.UN (currently showing $29 CDN) would establish the floor of an monetary offer if BAM ever decided to buy out BPY.UN, currently trading at $21.60 CDN. If the real estate holding were sold off piece meal and the company wrapped up do you think that the value that was realized would approach book value now - about $29 a share. And if so, how could the Directors of BPY.UN be acting in the interests of the shareholders in accepting the offer from BAM rather than realizing full value for shareholders? I am just wondering how an associated company like BAM buys a company below book value?

By the way I also hold a full position in BAM so I guess I will benefit either way this comes out but the offer looks below board.

Much thanks

Stuart

Q: We have a number of bpo preferred stocks. The current events of bpy buy out is positive. Would the bpo preferred come to par in rating with the Bam preferred if the deal is approved? Or is any provisions for a payout of the preferred debt in case of takeover?
Thank you and Happy new year.

Q: If the BPY going private deal ends up happening would this be positive for BAM?

Q: Hi 5i team
I am under water on Brookfield property partners if taken private at $16.50. I assume I will end up taking a loss. What are your thoughts and advice.

Regards

Q: I’m confused on the offer by Bam to buy out shares as to the Options shareholders have.
Is it 14.5%+- premium plus 0.4 of a BAM share? Or 14.5% premium or the 0.4 BAM share ?
If it’s 1 or the other, then I feel this low premium on the shares is not fair. It was recently higher and is simply consolidated before next push up. This is opportunistic similar to the lumber company deal that shares holders rejected last year( company escapes me atm (canfor or interfor).
How do you view the proposed deal?
Just last week I bought call option on BPY.un , would you simply take the profits today or hold out for possible better offer?
Thanks for your help again 🍻

Q: Happy New Year.

According the article in the link below, BPY.UN generated year to date funds from operation (FFO) of just $665 million while paying close to $1.541 billion in interest. I saw a fairly recent Youtube interview with Bruce Flatt, and he seemed quite upbeat on Brookfield's overall outlook going forward. How much of a concern is this FFO/Interest ratio to your team?

https://seekingalpha.com/article/4396749-look-astronomical-leverage-brookfield-property?mail_subject=11-3-yield-high-insider-ownership-pandemic-resistant-newtek-business-services&utm_campaign=nl-investing-income&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha

Thanks.