Brookfield Asset Management Goes Bargain Hunting

Brad Thomas

467 postsJanuary 4, 2021

Quote for Today:

“The key to teamwork is to learn a role, accept a role, and strive to become excellent playing it.”
– Pat Riley

(Brookfield Property)

As I’m reading the news this morning, there’s a common thread across the various channels and platforms.

Residential real estate trends will continue higher in 2021 thanks to factors like continuing low interest rates, the vaccines – which should boost job creation – and any continuation of work-from-home trends.

Considering how the latter two considerations seem slightly contradictory, it seems like the housing market has no chance to go anywhere but up. Which is wonderful for sellers and the larger economy, if true.

But how about commercial real estate? Where is that headed?

The here and now, after all, involves fitness centers and restaurants being closed again across multiple states. There’s talk about some hotel landlords reaching the end of their ropes when it comes to waiting for their rent checks. Businesses are still being wary about returning to the office, and too many consumers are still set on social distancing.

Essentially, there’s a continuing threat against every single one of the traditional REIT models going into 2021.

I know that’s not the most optimistic concern to be contemplating on the first trading day of the new year. But it’s one we have to contemplate regardless if we’re going to properly assess the situation and make some money off it.

We have to expect that more mom-and-pop businesses will be going out of business in the months ahead, putting smaller landlords in jeopardy. And many “big-box” real estate owners will see added pressure as well, including retail REITs and their office and apartment counterparts on both coasts.

Even so, I’ve still got money in some of those very positions – for fact-backed reasons too. And I’m still recommending plenty of other REITs right now, with every intention – and expectation – of making money off them.

As I wrote on New Year’s Day, “I aim to make the most of 2021. How about you?”

The markets are clearly on board with that this morning, up nicely across the U.S. board. But even if that wasn’t true, I would still be backing select real estate investment trusts.

They didn’t let me down in 2020, one of the most unexpected and insane years in modern history – or perhaps history in general. So why would I walk away from them now?

In fact, we just added new positions to both our Small-Cap Portfolio, which has returned 23% annually since inception in January 2016… and last year’s big debut, the Cash Is King Portfolio, which has returned 44% since mid-March.

I see plenty of opportunities these days, despite the uncertainty. That’s based on facts, figures, and verifiable data, by the way. Though I would like to include this perspective as well…

I’m currently re-reading legendary author Og Mandino’s A Better Way To Live. My mom gave me the book over 20 years ago, and it proved to be a timeless and extremely worthwhile read.

In it, Mandino explains his 17 rules to live by, the first of which I’ll share:

“Count your blessings. Once you realize how valuable you are and how much you have going for you, the smiles will return, the sun will break out, the music will play, and you will finally be able to move forward toward the life that God intended for you… with grace, strength, courage, and confidence.”

In my opinion, that’s a great way to begin the first Monday in 2021!

The World According to Commercial Real Estate

This morning, Brookfield Asset Management (BAM) and its related institutional partners announced they submitted an offer to buy the remainder of Brookfield Property Partners’ (BPYU) (BPY) units for $5.9 billion.

That comes down to $16.50 per share, making for a 14%-15% premium to BPY’s closing price on the TSX and Nasdaq, respectively, on December 31. It’s also an 8.9% premium to its 30-day, volume-weighted average price on the Nasdaq and a whopping 29.4% premium to the same on a 180-day basis.

In other Daily REITBeat news, Urban Edge Properties (UE) acquired Sunrise Mall in Massapequa, New York, from Unibail-Rodamco-Westfield. Its purchase price was $29.7 million, with up to $6 million in additional considerations if certain conditions are met.

The Long Island property involves 1.2 million square feet of retail space, with 65% of it currently occupied by anchor tenants such as Macy’s, Sears, and Dick’s Sporting Goods.

And Washington Prime Group (WPG) closed the year with Jacquelyn R. Soffer announcing her resignation from its board. This was apparently due to personal reasons, not professional ones. Though one has to wonder if some of those personal reasons are professionally-related stressors.

Let’s face it: It’s not easy being associated with a shopping-centric REIT these days.

(Source: Daily REITBeat)

In all, REITs ended a turbulent 2020 on a relative high note, up 1.1% during the last week. Though it also has to be pointed out that they finished the larger year with a -7.6% total return, underperforming the S&P 500 by 26%.

Data centers did the best (no big surprise there), while malls ended the year with the least love, both in terms of gains made and big-picture investor sentiment considering how they were the most heavily shorted.

Perhaps offering a peek into the upcoming months or even year, last week’s best- and worst-performing REITs were headlined by value names in lodging, office, and retail. There’s lots left to be determined in this value versus growth battle regardless.

Stick around to see what I mean!

Happy Investing

Brad Thomas

467 posts

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Brad Thomas is Senior Research Analyst at iREIT and CEO of Wide Moat Research LLC. With over 30 years of real estate experience, he is also long-time Editor of Forbes Real Estate Investor, a monthly subscription-based newsletter that dives deep into the vast world of profitable properties, and since 2021, he has served as an adjunct professor at New York University.

Thomas has also been featured on or in Forbes magazine, Kiplinger's, U.S. News and World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. And he was the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 based on both page views and number of followers.

Thomas is the recently-published author of The Intelligent REIT Investor Guide (2021), co-author of The Intelligent REIT Investor (2016), and he wrote The Trump Factor: Unlocking The Secrets Behind The Trump Empire (2016) - all available on Amazon.

Thomas received a bachelor of science in business/economics from Presbyterian College and is married with five wonderful kids.

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Brookfield Asset Management Goes Bargain Hunting

Brad Thomas

467 postsJanuary 4, 2021

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Brookfield Asset Management Goes Bargain Hunting

467 postsJanuary 4, 2021

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