Real estate is a very difficult asset class to gauge these days. The coronavirus pandemic as fundamentally changed how society uses real estate. Digitization has rapidly increased in importance compared to the past.
In this context, in the past, I have been bearish on Brookfield Property Partners (TSX:BPY.UN). This article is going to outline the contrarian perspective on why BPY could turn out to be a good investment right now. After all, Warren Buffet would love this pick.
Real estate and risk
Much ado has been made of Brookfield Property Partners’ exposure to retail and office space. These assets are likely to be hit hard due to the previously mentioned digitization trend. That said, a majority of this company’s revenue (around 55%) is generated from BPY’s portfolio of multifamily and commercial real estate.
On one hand, the company has a little less than half of its business tied to office and retail real estate assets. These are risky. On the other hand, revenues are likely to continue to be stickier than investors and analysts expect due to the quality of BPY’s assets and its diversified holdings.
The company’s assets are widely considered to be among the best in class across the board. This supports a bull case that cash flows in the future may be more stable than strained in the coming quarters. Also, there is definitely potential for share price appreciation from these levels.
Value and income investors take note
From a valuation perspective, Brookfield Property Partners hasn’t been this cheap in quite some time, which makes the value argument very intriguing for long-term investors. The share price decline of Brookfield Property Partners in recent months has resulted in a dividend yield of approximately 11%, at the time of writing. This is much higher than the company’s traditional range of 7-8% in recent years.
From an income perspective, this dividend is too juicy to ignore. Of course, investors may have concerns around the payout ratio of Brookfield Property Partners. However, delinquencies and non-payment of rent are materializing at a slower clip than expected. Market sentiment could shift positively in the near-term. Thus, income investors may regret not picking up shares in hindsight with an 11% yield.
Further, Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) fully backs Brookfield Property Partners. BAM is the company’s largest shareholder, further boosting the argument BPY’s dividend yield could be maintained. Brookfield Asset Management recently put forward a substantial issuer bid to increase its ownership up to 60% in respect to the value it sees in Brookfield Property Partners.
This bid has stoked bets that BAM may choose to fully acquire and integrate BPY back into the parent company if the stock price gets too cheap. This theoretically puts a floor beneath BPY’s share price in the near-term.
BAM and its incredibly talented management team would love nothing more than to take advantage of negative market sentiment. They may plan to re-acquire BPY at dirt cheap levels, spinning out these assets in the future at much higher prices when things cool down.
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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV and Brookfield Property Partners LP.
Metro Vancouver, Fraser Valley remain a sellers' markets, say real estate groups – CBC.ca
Housing sales in Metro Vancouver fell almost 17 per cent in November compared to the previous month, according to the Real Estate Board of Greater Vancouver.
But the industry group says as trends go, demand remains high, making it a sellers’ market.
REBGV’s monthly tally shows 3,064 homes sold last month across the region, compared to 3,687 in October 2020.
Compared to November 2019, sales were up 22.7 per cent.
Colette Gerber, REBGV chair, says demand from buyers has been at “near record levels” since the summer.
“This is putting upward pressure on home prices, particularly in our detached and townhome markets,” she said.
The Sunshine Coast showed the largest increase in year-over-year sales according to the data, with Squamish and the Gulf Islands not far behind.
“The rise of work-from-home arrangements and physical distancing policies is causing some home buyers to opt for less densified areas,” said Gerber.
The total number of Metro Vancouver homes currently listed for sale is 11,118, representing a 10 per cent decrease from October 2020.
Gerber says the current market favours sellers because demand is outstripping supply.
The Multi Listing Service home price index composite benchmark price for all residential properties in Metro Vancouver — detached homes, townhomes and apartments — is $1,044,000, a 5.8 per cent increase year-over-year and a 0.1 per cent decrease compared to October 2020.
Benchmark prices in each of the three categories are:
- Detached home: $1,538,900
- Attached home: $814,800
- Apartment: $676,500
The sales scene in the Fraser Valley is even hotter, according to the Fraser Valley Real Estate Board.
It describes the level of demand as “unrelenting,” even though like Metro Vancouver, November sales dropped by 8.3 per cent from October.
In total, there were 2,173 property sales, an increase of 54.7 per cent compared to November 2019.
The boards says monthly sales records were set in September, October and November compared to previous years.
“We expected November activity to moderate due to the season, but the desire for family-sized homes and their benefits continues to dominate,” said president Chris Shields.
“Since the summer, we’ve seen the strongest demand in our board’s 99 year history, specifically for single-family detached and townhomes,”
The FVREB calculates the benchmark prices for the region as:
- Single family detached: $1,061,500
- Townhome: $570,100
- Apartment/condo: $435,900
Hamilton-Burlington real estate sales slow down in November – Global News
The latest real estate statistics for Hamilton and Burlington show the market continues to cool off after a red hot summer.
The Realtors Association of Hamilton-Burlington (RAHB) says 1,233 homes were sold in November, down 24 per cent from October, but up 17 per cent compared to November of last year.
The average price for a home in the area is now $722,317, 0.11 per cent higher than last month and a 21 per cent jump from November 2019.
Realtors Association President Kathy Della-Nebbia says there are a number of reasons for the slowdown in activity, including the rising cases of coronavirus and Hamilton being placed in the province’s COVID-19 red zone, as well as the colder weather.
“What we can initially see is that the market has slowed from last month, and this is due to the colder weather, the COVID-19 cases increasing throughout the province, and Hamilton/Burlington moving to Red Zone as of November 16 where open houses are now banned,” says RAHB President Kathy Della-Nebbia. “An extremely low number of active listings at the end of each month is continuing to drive average prices higher. It’s a vicious cycle of sellers not listing their homes until they are confident they will find another home to buy.”
RAHB says new listings were down nearly 29 per cent over October 2020 and up 16 per cent over last November.
The number of active listings available at the end of the month was 40.8 per cent lower compared to the previous year.
The number of sales of single-family properties in the RAHB market decreased in November 2020 by 3.8 per cent compared to the same month last year, the number of new listings was down 10.5 per cent over last year, and the average sale price increased by 24.4 per cent to $812,912.
Townhouse sales activity across the entire RAHB market area increased from November 2019 by 15.2 per cent, new listings were up 19 per cent, and the townhouse average sale price increased by 17.6 per cent to $606,367.
“The activity for single-family properties was slower, and this is most likely because fewer sellers chose to list their homes during this time,” says Della-Nebbia. “We can also see that towns and apartments are still quite active, but their average price did not increase as much as single-family properties, and so this could indicate that single-family properties are still much more in demand — this would make sense during these times as we see a movement towards homes with more elbow room and outdoor space.”
How to choose between multiple offers on your real estate listing
© 2020 Global News, a division of Corus Entertainment Inc.
Kudos: Richmond Hospital receives $250,000 from real estate developer – Richmond News
A Richmond and Vancouver real estate developer donated a total of $250,000 to Richmond Hospital.
Michael Ching donated $200,000 towards Richmond Hospital’s new acute care tower and partnered with South China Morning Post to donate an additional $50,000 towards Richmond Hospital Foundation’s Surgical Restart campaign.
He also donated 25,000 masks to the Vancouver Diamonds Lions Club as part of their disposable masks fundraiser for the Richmond Hospital Foundation.
“Having lived in Richmond for a decade and Richmond being home to most of my projects and work, this contribution is a thank you for the care the hospital has provided for its community over all of these years,” said Ching.
He added that new equipment and facilities are important to provide the best care to Richmond residents.
Natalie Meixner, CEO of the Richmond Hospital Foundation, said they are thankful to Ching’s donation.
“Mr. Ching’s philanthropic leadership and his partnership with South China Morning Post, is an inspiration to the community and we are very grateful for his dedication in building a better and healthier future for Richmond.”
The Richmond Hospital Foundation raised over $100 million to help fund for medical equipment, improvements in patient care services and upgraded facilities in the past 30 years.
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