Investing

Brookfield Companies

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  • Mar 7th, 2024 6:56 pm
Deal Addict
Feb 26, 2017
2902 posts
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50.70 looks like a pretty good price for BIP to me. I already have a lot and will just be adding with the drip.
Deal Fanatic
Jun 3, 2009
5735 posts
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Montreal
Chance7652 wrote: 50.70 looks like a pretty good price for BIP to me. I already have a lot and will just be adding with the drip.
I will be dripping a few shares too. It's simply too cheap at 50.
Deal Fanatic
Nov 9, 2013
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Edmonton, AB
treva84 wrote: Has anyone spent anytime looking at BPY.UN?
From what I gather NAV is $27-29 USD and it currently trades at ~$21 USD creating a 23-28% margin of safety. Anyone have any other thoughts about BPY?
Buy right, hold tight. Keep calm and go long.
Deal Addict
Feb 26, 2017
2902 posts
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treva84 wrote: From what I gather NAV is $27-29 USD and it currently trades at ~$21 USD creating a 23-28% margin of safety. Anyone have any other thoughts about BPY?
BPY have some great assets (canary warf, properties in Manhattan). They also have 13x leverage from what I've read. I think they are safe due to their asset quality and Brookfield backing them but the leverage is high.
Deal Fanatic
Nov 9, 2013
5885 posts
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Chance7652 wrote: BPY have some great assets (canary warf, properties in Manhattan). They also have 13x leverage from what I've read. I think they are safe due to their asset quality and Brookfield backing them but the leverage is high.
Yup totally agree.
Buy right, hold tight. Keep calm and go long.
Deal Fanatic
Nov 9, 2013
5885 posts
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Edmonton, AB
I'm going to pull the trigger on some BPY.UN this morning. I'm skeptical about the GGP acquisition but management is capable and the NAV discount is (in my opinion) too good to pass up.
Buy right, hold tight. Keep calm and go long.
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Apr 23, 2009
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treva84 wrote: I'm going to pull the trigger on some BPY.UN this morning. I'm skeptical about the GGP acquisition but management is capable and the NAV discount is (in my opinion) too good to pass up.
Why are you skeptical about GGP acquisition? You don't think it is a good buy or do you think it will not pass the shareholder vote @ GGP?
Why do you want to climb Mt. Everest, Sir? - Because it is there.

— George Leigh Mallory
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Nov 9, 2013
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ruchir wrote: Why are you skeptical about GGP acquisition? You don't think it is a good buy or do you think it will not pass the shareholder vote @ GGP?
I think the assets are high quality (location location location) but what worries me is the large amount of shares they are issuing to finance the acquisition, especially considering BPY trades at a discount to NAV. I think it will close.
Buy right, hold tight. Keep calm and go long.
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Jun 19, 2009
6135 posts
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Scarborough
Would buying BAM.A be safer than specific companies mentioned (BIP, BPY etc.)?
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Nov 9, 2013
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Edmonton, AB
SkimGuy wrote: Would buying BAM.A be safer than specific companies mentioned (BIP, BPY etc.)?
I guess it depends on what you are looking for - it's a way to get diversification across all of the limited partnerships and also get some revenue from asset management side. On the other hand, you get the good with the bad and it also has a lower overall yield then some of the individual LPs.
Buy right, hold tight. Keep calm and go long.
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Apr 23, 2009
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treva84 wrote: I think the assets are high quality (location location location) but what worries me is the large amount of shares they are issuing to finance the acquisition, especially considering BPY trades at a discount to NAV. I think it will close.
The potential dilution will be more than recouped once Brookfield redevelops the mall real-estate into a combination of residential and corporate real estate. These malls are located at prime locations but will be capital intensive to develop. That's one reason why there is a huge barrier to entry for other developers. GGP acquisition is really not expensive for Brookfield. It has the expertise and capacity to undertake billions of dollars in redevelopment.

In other words, the financing through shares when compared to GGP's current value may look expensive or dilutive but Brookfield is getting this for cheap because (1) it already own a significant portion of GGP so makes synergy, (2) the intrinsic value of GGP acquisition is much higher once redeveloped into corporate and residential properties, (3) there not many developers that can undertake a project of this scale.
Why do you want to climb Mt. Everest, Sir? - Because it is there.

— George Leigh Mallory
Deal Fanatic
Nov 9, 2013
5885 posts
7465 upvotes
Edmonton, AB
ruchir wrote: The potential dilution will be more than recouped once Brookfield redevelops the mall real-estate into a combination of residential and corporate real estate. These malls are located at prime locations but will be capital intensive to develop. That's one reason why there is a huge barrier to entry for other developers. GGP acquisition is really not expensive for Brookfield. It has the expertise and capacity to undertake billions of dollars in redevelopment.

In other words, the financing through shares when compared to GGP's current value may look expensive or dilutive but Brookfield is getting this for cheap because (1) it already own a significant portion of GGP so makes synergy, (2) the intrinsic value of GGP acquisition is much higher once redeveloped into corporate and residential properties, (3) there not many developers that can undertake a project of this scale.
I largely agree and I also buy into the re-development narrative. My pessimistic side remains skeptical, but I'm committed now! We'll see what happens.
Buy right, hold tight. Keep calm and go long.
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Apr 23, 2009
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treva84 wrote: I largely agree and I also buy into the re-development narrative. My pessimistic side remains skeptical, but I'm committed now! We'll see what happens.
I saw the video presentation that you posted earlier in post # 39. One of the key advantages that Bruce emphasized was the scale. Not many companies can invest this big.

When I think of Brookfield, the following comes to mind:

They buy properties with secured long term cash flows at attractive prices that others can't afford to buy. Their properties don't have many buyers due to the scale involved so they squeeze a good price.
Why do you want to climb Mt. Everest, Sir? - Because it is there.

— George Leigh Mallory
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
SkimGuy wrote: Would buying BAM.A be safer than specific companies mentioned (BIP, BPY etc.)?
treva84 wrote: I guess it depends on what you are looking for - it's a way to get diversification across all of the limited partnerships and also get some revenue from asset management side. On the other hand, you get the good with the bad and it also has a lower overall yield then some of the individual LPs.
It's a similar argument for buying an index ETF vs a sector based one.... However with Brookfield, I would like to think that it goes deeper than that and it's really a bet on management (both at the parent level and the child level) that they will right the ship regardless of the sector. If the child (BIP, BPY...) level doesn't get the job done, the parent (BAM) will step in and replace the management at the child level. So, it might be more interesting to investing in the poor performers...
Deal Fanatic
Jun 3, 2009
5735 posts
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Montreal
treva84 wrote: BAM has been buying BPY shares on the open market through out September - https://www.canadianinsider.com/node/7? ... search=bpy

Anyone else looking forward to the investor day tomorrow? Smiling Face With Open Mouth
I guess good things have been said about BIP since this morning? Stock is up.
Chance7652 wrote: Positive article on BIP in the Globe and Mail.

https://www.theglobeandmail.com/investi ... k-on-sale/
I really dislike the paywalls.
Deal Addict
Feb 26, 2017
2902 posts
4581 upvotes
cn_habs wrote: I really dislike the paywalls.
Nice 2%+ bump by BIP today

You must not be clicking the stop button on the G&M website quick enough :). Here you go.

Brookfield Infrastructure: an income stock on sale
JOHN HEINZL INVESTING COLUMNIST
PUBLISHED 18 HOURS AGO
UPDATED SEPTEMBER 25, 2018FOR SUBSCRIBERS
I like profitable, growing businesses that enjoy an enduring competitive advantage or “moat.” I like them even more when they go on sale.

Brookfield Infrastructure Partners LP (BIP.UN-TSX) is a shining example.

Since touching a recent high of $55 in August, shares of the diversified global infrastructure play have skidded about 9 per cent – likely a response to rising interest rates, which have put pressure on dividend stocks in general.

Now for the silver lining. The units, which closed Tuesday at $50.50 on the Toronto Stock Exchange, now yield an attractive 4.8 per cent (calculated by converting BIP’s annualized dividend of US$1.88 to Canadian dollars.)

BROOKFIELD INFRA PARTNERS LP UNITS51.74+0.79 (1.55%)
PAST THREE MONTHS
AUG. 16
JUNE 25
50.06

SEPT. 26
51.74

SOURCE: BARCHART

Could BIP’s shares go lower? Sure. Will they go a lot lower? I doubt it. If you’re investing for the long run, the current dip may present an attractive entry point. While you wait for the shares to rebound, you’ll collect a juicy dividend that will almost certainly grow for years to come.

Here are five reasons I’m big on BIP. (I own the units personally and in my model Yield Hog Dividend Growth Portfolio.)

A WELL-DIVERSIFIED ASSET BASE
BIP’s roughly US$30-billion portfolio spans five continents and includes utilities, toll roads, railways, ports, communications towers and energy infrastructure assets – all essential to the functioning of the economy. The diversified nature of the portfolio – both by geography and asset type – helps to control political and economic risk. What’s more, the assets typically have high barriers to entry, which minimizes competition, and the vast majority are either regulated or contracted on a long-term basis, which makes for steady and predictable cash flow.

THE RIGHT PLACE AT THE RIGHT TIME
With population and economic growth creating demand for infrastructure investment around the world, opportunities abound for a global player such as BIP. As well, debt-strapped governments are increasingly turning to the private sector to operate infrastructure, creating a steady flow of potential deals. "BIP is a global infrastructure leader. In one complete package the company offers investors unparalleled access to a highly diversified … portfolio,” Industrial Alliance Securities analyst Jeremy Rosenfield said in a note in which he initiated coverage of BIP with a buy rating.

A GROWING PAYOUT
If you think BIP’s distribution is good now, it’s about to get even better. BIP targets annual distribution growth of 5 per cent to 9 per cent, and it typically announces increases in February when it releases fourth-quarter results. The company has exceeded its own distribution guidance over the past five years, with a compound annual growth rate of more than 10 per cent. There are no guarantees that double-digit growth will continue, but it’s a fairly safe bet that BIP will at least achieve its distribution growth target when it announces its next increase.

RISING CASH FLOW
Distributions can’t grow in a vacuum. They have to be supported by rising cash flow or the increases won’t be sustainable. BIP aims to increase its cash flow – measured by funds from operations or FFO per share – by 6 per cent to 9 per cent annually through 2022, a rate that is in line with Mr. Rosenfield’s forecast. He cites four main drivers of BIP’s cash-flow growth: price increases, including contractual inflation escalators; growing demand from customers; investments to expand existing assets; and mergers and acquisitions. BIP and its institutional partners have had a busy year on the acquisition trail, acquiring residential energy services provider Enercare Inc., the Western Canadian natural gas gathering and processing assets of Enbridge Inc. and data centre operations from AT&T Inc.

FAVOURABLE ANALYST RATINGS
Analysts aren’t always right about stocks, of course, but in the case of BIP there is widespread agreement that the outlook is positive. Of the 11 analysts who follow the company, there are 10 buy ratings, one hold and no sells. The average 12-month price target is US$46.55 ($60.25), which implies a gain of about 20 per cent from current levels. (The units also trade on the New York Stock Exchange under the ticker BIP.) Robert Catellier of CIBC World Markets, which has a buy on the units, calls BIP a “core infrastructure holding due to its scale, quality portfolio and sponsorship from [parent] Brookfield Asset Management Inc.”

CLOSING THOUGHTS
Even excellent companies come with risks. In BIP’s case, “a significant change to long-term interest rate expectations would be a material headwind given the capital-intensive nature of its business model, “ Mr. Catellier said in a note. The company also faces country-specific risks, particularly in Brazil, which has struggled for years with political and economic instability. Yet BIP has demonstrated an ability to operate in a range of environments, and – despite the current softness in its share price – I expect that the distribution will continue to grow and the unit price will eventually move higher as well. (For a discussion of the tax implications of owning BIP’s units, read my column.)

Globe Unlimited subscribers can view the complete model Yield Hog Dividend Growth Portfolio at tgam.ca/dividendportfolio.
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Jun 19, 2009
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Scarborough
I guess I'll buy some BIP when it dips again. It's better to hold in the RRSP due to withholding taxes correct?
Deal Fanatic
Nov 9, 2013
5885 posts
7465 upvotes
Edmonton, AB
SkimGuy wrote: I guess I'll buy some BIP when it dips again. It's better to hold in the RRSP due to withholding taxes correct?
You can buy BIP.UN which is traded in CAD on the TSE.

I believe the distribution is considered a return of capital (not a dividend) so there's tax implications in that regard if you hold in non-reg account.
Buy right, hold tight. Keep calm and go long.

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