Xerxes Posted March 20, 2020 Share Posted March 20, 2020 At the high level, wouldn't what happened with BPY's business validate in some way the overall "asset-light" BAM model to have the flagship separate then its subsidiaries. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 20, 2020 Share Posted March 20, 2020 At the high level, wouldn't what happened with BPY's business validate in some way the overall "asset-light" BAM model to have the flagship separate then its subsidiaries. Yes, I think it is correct. the financing on an asset level means that can amputate limps and keep the torso alive, so to speak it won’t help with obtaining new clients and also means shrinkage and lower fees. Babcock and Brown that I mentioned upstream was an Australian asset manager which collapsed when equity markets tanked and debt markets were closed in 2008 and they had substantial corporate debt to roll over but couldn’t. Link to comment Share on other sites More sharing options...
jfan Posted March 21, 2020 Share Posted March 21, 2020 At the high level, wouldn't what happened with BPY's business validate in some way the overall "asset-light" BAM model to have the flagship separate then its subsidiaries. Yes, I think it is correct. the financing on an asset level means that can amputate limps and keep the torso alive, so to speak it won’t help with obtaining new clients and also means shrinkage and lower fees. Babcock and Brown that I mentioned upstream was an Australian asset manager which collapsed when equity markets tanked and debt markets were closed in 2008 and they had substantial corporate debt to roll over but couldn’t. How did BAM survive 2008 whereas Babcock and Brown didn't? Link to comment Share on other sites More sharing options...
petec Posted March 21, 2020 Share Posted March 21, 2020 At the high level, wouldn't what happened with BPY's business validate in some way the overall "asset-light" BAM model to have the flagship separate then its subsidiaries. Yes, I think it is correct. the financing on an asset level means that can amputate limps and keep the torso alive, so to speak it won’t help with obtaining new clients and also means shrinkage and lower fees. Babcock and Brown that I mentioned upstream was an Australian asset manager which collapsed when equity markets tanked and debt markets were closed in 2008 and they had substantial corporate debt to roll over but couldn’t. BAM did have a bridge loan to roll, IIRC, but got away with it. But you’re right - primary damage is reputational. Which is why having lots of dry powder (newly raised funds) plus Oaktree (countercyclical fundraising) matters. Link to comment Share on other sites More sharing options...
chrispy Posted March 21, 2020 Share Posted March 21, 2020 Everyone's thoughts here have been helpful. The yield on BPY is about fifteen percent which is terrifyingly large. The shares have always looked cheap to me, look much cheaper now, but have always become more cheap which keeps me away. I plan to be back in BAM at some point Link to comment Share on other sites More sharing options...
ValueMaven Posted March 22, 2020 Share Posted March 22, 2020 Folks loved BAM at $60 and now hate it sub $40 ... I’ll be adding to my position in coming days on weakness. Glad management lost out on that $18B elevator deal just a month ago!, Link to comment Share on other sites More sharing options...
petec Posted March 22, 2020 Share Posted March 22, 2020 Folks loved BAM at $60 and now hate it sub $40 ... I’ll be adding to my position in coming days on weakness. Opportunity knocks. Link to comment Share on other sites More sharing options...
peterHK Posted March 23, 2020 Share Posted March 23, 2020 Folks loved BAM at $60 and now hate it sub $40 ... I’ll be adding to my position in coming days on weakness. Glad management lost out on that $18B elevator deal just a month ago!, And that Cincinatti Bell deal. Link to comment Share on other sites More sharing options...
plato1976 Posted March 23, 2020 Share Posted March 23, 2020 Will BPY/BPR need serious help to survive (either help from BAM, or huge dilution) ? If so, significant reputation damage ahead Folks loved BAM at $60 and now hate it sub $40 ... I’ll be adding to my position in coming days on weakness. Glad management lost out on that $18B elevator deal just a month ago!, And that Cincinatti Bell deal. Link to comment Share on other sites More sharing options...
chrispy Posted March 23, 2020 Share Posted March 23, 2020 Shutting down all major cities, all of their malls, and most likely forcing several retailers into bankruptcies is the perfect storm for BPY. While I believe they can survive it was and is quite obvious the shares can be bought for a lower price. I'm not here to say I buy and hold, I'm here to make the greatest returns I can. Sold out significantly higher and believe I'll be able to buy back in even lower (all in Roth so no tax consequences or fees) Link to comment Share on other sites More sharing options...
brk64311 Posted March 23, 2020 Share Posted March 23, 2020 BAM update: https://bam.brookfield.com/~/media/Files/B/Brookfield-BAM-IR-V2/documents/%20Update_for_Brookfield_Shareholders_3-23-2020.pdf Link to comment Share on other sites More sharing options...
cmlber Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. Sure, BPY has serious issues, but how is BIP yielding almost 7.5% right now? Most of the cash flows come from very long-term contracts with investment grade counter-parties and the debt is non-recourse at the asset level. 1 or 2 of those assets might blow up, but the stock has almost been cut in half even though interest rates have fallen 100bps... Am I missing something? I guess relative to credit in general it's not as attractive given whats happened to non-govt bond prices in a lot of sectors, but seems like very good value right here. Link to comment Share on other sites More sharing options...
chrispy Posted March 23, 2020 Share Posted March 23, 2020 I liked the letter from Bruce. His message has been consistent for years. He makes a point, maybe obvious to others but I overlooked it, that rents will be collected during this and they are not managing the stores. I was surprised by his message that they would primarily be buying in the publicly traded equity markets (oak in debt obviously). Does that mean they are interested in something like an HHC or a utility type business? Would they ever buy into a US broadband business for instance? Link to comment Share on other sites More sharing options...
petec Posted March 23, 2020 Share Posted March 23, 2020 I liked the letter from Bruce. His message has been consistent for years. He makes a point, maybe obvious to others but I overlooked it, that rents will be collected during this and they are not managing the stores. That's all very well until the tenants go bust. I was surprised by his message that they would primarily be buying in the publicly traded equity markets (oak in debt obviously). Does that mean they are interested in something like an HHC or a utility type business? Would they ever buy into a US broadband business for instance? They've been buying TransAlta. But if you think about it it's a pretty obvious statement. Public markets panic more and faster than private ones. Public is where the value is. Private prices won't have dropped nearly so much so fast (unless the private seller is distressed). Link to comment Share on other sites More sharing options...
petec Posted March 23, 2020 Share Posted March 23, 2020 Added to BPY. Even if retail and LP are both $0, the office NAV alone is still above the current market cap. Interesting snippet posted by gokou3 on the "what are you buying" thread today. Link to comment Share on other sites More sharing options...
thepupil Posted March 23, 2020 Share Posted March 23, 2020 about that office NAV...go check out CUZ, VNO, SLG, PGRE, DEI, BXP, BLND etc. I'm not saying BAM isn't cheap or BPY isn't cheap, but there are less levered just as cheap, assets out there ready for the taking. Of course, BAM is different in that you get the asset manager angle. Link to comment Share on other sites More sharing options...
gokou3 Posted March 23, 2020 Share Posted March 23, 2020 Not saying office values aren't inflated nor won't come down, but i think we can agree that their entire portfolio of malls not collectively worth zero either. Would also mention that BPY repurchased 5.5M shares in the last 2 weeks at much higher prices -- up to 100% higher. That's >0.5% of shares outstanding. I think the market's main worry is the company running into liquidity issue and become a forced seller of assets. By repurchasing shares, they are showing they do have liquidity (unless of course you think they are bluffing). If they can ride it out, then the assets will recover. People will visit shopping malls again albeit tenants may renew at lower rents. https://ceo.ca/api/sedi?symbol=bpy Link to comment Share on other sites More sharing options...
thepupil Posted March 23, 2020 Share Posted March 23, 2020 Not saying office values aren't inflated nor won't come down, but i think we can agree that their entire portfolio of malls not collectively worth zero either. Can we? if so, MAC looks pretty cheap down 83% at a positively CBL like FFO multiple. I think Brookfield Asset Management is getting a pass because they have dry powder and their opportunity set just got amazing, but it doesn't make BPY's assets any less underwater if what's implied in other securities comes to pass. To be clear, I am up to my eyeballs in commercial real estate. I think it's a good time to buy this stuff. I have at far higher prices. But BPY's underlying assets are, from what I can tell, more levered than the public REITs which have gotten DESTROYED. Link to comment Share on other sites More sharing options...
Pauly Posted March 23, 2020 Share Posted March 23, 2020 I'm really curious to see what Oaktree will do during all of this, hopefully they can hit a few homers and BAM will look like geniuses for partnering up when they did. I liked Bruce's letter as well. Although talk is cheap, it is good to hear from him and know that he's not curled up under his desk with a bottle of whiskey. Link to comment Share on other sites More sharing options...
EricSchleien Posted March 23, 2020 Share Posted March 23, 2020 I'm really curious to see what Oaktree will do during all of this, hopefully they can hit a few homers and BAM will look like geniuses for partnering up when they did. I liked Bruce's letter as well. Although talk is cheap, it is good to hear from him and know that he's not curled up under his desk with a bottle of whiskey. Bruce Flatt curled up under a desk drinking whiskey is a super sad image. I don't even think he'd be that fun of a drunk. Bruce: "Well, look, you know, if you think about it, times are tough. And, well...it seems to be...a somewhat rough environment these days. So you know, if you look at that way, well you know, our proooecess is just to drink some whiskey. That's how I imagine Bruce while he's drunk. Link to comment Share on other sites More sharing options...
John Hjorth Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. ... cmlber, I would humbly suggest this being temporary, because BIP can't grow by its own cash flow and earnings [, thereby competing with other capital allocation alternatives within the BAM system, including keeping ships already set to sea afloat]. Link to comment Share on other sites More sharing options...
Uccmal Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. ... cmlber, I would humbly suggest this being temporary, because BIP can't grow by its own cash flow and earnings [, thereby competing with other capital allocation alternatives within the BAM system, including keeping ships already set to sea afloat]. John, Can you elaborate. As an aside I sold part of my BAM put position today. I bought it near the highs a month ago for 900 US, to hedge my large exposure, and sold it for 21,500 a couple of hours ago. Doesn’t even begin to make up for the bath I have taken, but helps. Promptly pushed the proceeds into BIP, BEP, ENB. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. Sure, BPY has serious issues, but how is BIP yielding almost 7.5% right now? Most of the cash flows come from very long-term contracts with investment grade counter-parties and the debt is non-recourse at the asset level. 1 or 2 of those assets might blow up, but the stock has almost been cut in half even though interest rates have fallen 100bps... Am I missing something? I guess relative to credit in general it's not as attractive given whats happened to non-govt bond prices in a lot of sectors, but seems like very good value right here. I think it’s the other way round and BAM is thrown out with the BPY water. Link to comment Share on other sites More sharing options...
John Hjorth Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. ... cmlber, I would humbly suggest this being temporary, because BIP can't grow by its own cash flow and earnings [, thereby competing with other capital allocation alternatives within the BAM system, including keeping ships already set to sea afloat]. John, Can you elaborate. As an aside I sold part of my BAM put position today. I bought it near the highs a month ago for 900 US, to hedge my large exposure, and sold it for 21,500 a couple of hours ago. Doesn’t even begin to make up for the bath I have taken, but helps. Promptly pushed the proceeds into BIP, BEP, ENB. Sure, Al, Please look up BIP 2019 Annual Report, p. 63 - 77. BIP has a history of growing by issuing new units for new projects, because earnings and cash flows can't keep up with growth. It's done in a way, where new units are issued, after which BAM signs up for new preferred BIP units on basically the same terms. So capital needs of BIP compete with other capital allocation alternatives within the BAM sphere. Link to comment Share on other sites More sharing options...
petec Posted March 23, 2020 Share Posted March 23, 2020 Seems like BIP is being thrown out with the BAM bathwater. ... cmlber, I would humbly suggest this being temporary, because BIP can't grow by its own cash flow and earnings [, thereby competing with other capital allocation alternatives within the BAM system, including keeping ships already set to sea afloat]. John, Can you elaborate. As an aside I sold part of my BAM put position today. I bought it near the highs a month ago for 900 US, to hedge my large exposure, and sold it for 21,500 a couple of hours ago. Doesn’t even begin to make up for the bath I have taken, but helps. Promptly pushed the proceeds into BIP, BEP, ENB. Sure, Al, Please look up BIP 2019 Annual Report, p. 63 - 77. BIP has a history of growing by issuing new units for new projects, because earnings and cash flows can't keep up with growth. It's done in a way, where new units are issued, after which BAM signs up for new preferred BIP units on basically the same terms. So capital needs of BIP compete with other capital allocation alternatives within the BAM sphere. For deals, yes. If BAM maintains its stake. But BIP generates enough to fund organic capex internally, which drives a decent amount of growth. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now