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Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY) owns and operates a globally diversified portfolio of high-quality assets that generate sustainable and growing distributions over the long term.
With a current yield of over 6% and a distribution growth target of 5%–8% annually, the company offers an attractive risk-adjusted total return to shareholders. The company is Brookfield Asset Management’s primary vehicle to make investments across all strategies in real estate.
The company has a price to earnings ratio of 17.76, a price to book ratio of 0.63 and market capitalization of 23 billion. Debt is opportunistically used at Brookfield Property, as evidenced by a debt to equity ratio of 1.26.
The company has excellent performance metrics with an operating margin of 52.54% and a return on equity of 5.43%.
The company’s goal is to be a leading global owner and operator of high-quality real estate that generates sustainable and growing distributions to shareholders and provides capital appreciation over the long term. The company has 19,000 employees involved in Brookfield’s real estate businesses worldwide.
The company’s diversified core office and retail portfolios consist of high-quality office and retail assets in some of the world’s most dynamic markets which have stable cash flow as a result of long-term leases.
The company targets between 10% and 12% total return on core portfolios, and achieves these targets through the mark-to-market of rents upon lease expiry, escalation provisions in leases and projected increases in occupancy that generate strong same-property net operating growth without significant capital investment.
The company also targets earning between 8% and 11% unlevered, pretax returns on construction costs for development and redevelopment projects.
The company currently has approximately 10 million square feet of active development projects underway with another 11 million square feet in planning stages. The company’s development track record reflects successful completions on time and on budget.
The company’s investments portfolio includes equity invested in Brookfield-sponsored real estate opportunity funds, which targets high-quality assets with operational upside across various real estate sectors, including office, retail, multifamily, logistics, hospitality, triple net lease, self-storage, student housing and manufactured housing.
The company targets a 20% total return on the investments portfolio and a 2.0 times multiple of capital on the equity invested into these vehicles.
Overall, the company seeks to earn leveraged after-tax total returns of 12% to 15% on invested capital. Returns are composed of current cash flow, distribution growth and capital appreciation.
The company’s global scale and best-in-class operating platforms provides a unique competitive advantage to efficiently allocate capital around the world.
Due to the stable portfolio and flexible balance sheet, the company’s business model is self-funding and does not require access capital markets to fund continued growth.
The company has a long track record of leading real estate transactions, whereby it invests in high-quality assets on a value basis.
Additionally, the company has demonstrated an ability to develop high-quality assets in markets where asset valuations are in excess of development costs, earning attractive returns on equity.
The company benefits from using the Brookfield logo in connection with marketing activities as Brookfield has a strong reputation throughout the global real estate industry.
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Fool contributor Nikhil Kumar owns shares of BROOKFIELD ASSET MANAGEMENT INC. CL.A LV and Brookfield Property Partners LP. 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. Brookfield Property Partners LP and Brookfield Asset Management are recommendations of Stock Advisor Canada.
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