Real Estate Investment Trusts (REITs) are becoming increasingly popular with investors. And it is no wonder – they offer the stability and potential big gains of real estate but for a considerably smaller investment. They also come with teams of managers who do the heavy lifting for you, and without the burdens of being a landlord.
But as REITs become more popular, the market becomes increasingly flooded with options. How is an investor to know which REIT to put their money into? According to a recent article by The Motley Fool,Brookfield Property Partners (BPY) is one REIT that is a screaming buy right now.
So, what makes BPY such an attractive investment right now? Let’s take a look at some of the factors.
- Income and Growth
BPY offers investors both a healthy yield (currently sitting at about 7%) as well as stable growth. The yield is currently supported by a 67% payout ratio when asset sales and cash flow generation are accounted for.
Management’s cash distribution growth target is 5-8% annually – a target which is well supported by the company’s organic growth of 7-9%.
- Good Value
Another reason to consider adding BPY to your portfolio right now is its incredible value. While the REIT is currently underperforming compared to sister companies, Brookfield Infrastructure (BIP performing at about 18%) and Brookfield Renewable (BEP performing at about 12%), you need to keep in mind that BPY (currently performing at about 7.5%). Also, it’s important to note that all three companies are run by the same management company which has a vested interest in seeing to it that each business is successful.
And since the long-term goal of management is to see total returns for all three companies ranging from 12-15%, it is safe to say that BPY is likely to outperform in the not too distant future.
At the time of writing this blog, BPY was trading at discounts from its book value of 34% and discounts from its net asset value of 30%. This gives it plenty of room for upside.
- Desirable Properties and a Strong Management Team
The property holding of BPY includes some highly desirable commercial properties consisting of retail and office assets which make up about 85% of the total portfolio. The rest of the properties are opportunistic investments which could give investors returns of up to 20%. Not only that, the company has a best-in-class management team that is committed to growing and strengthening the company each year.
If you are looking to invest in a REIT, you would do well to consider adding BPY to your portfolio. Currently trading at about a 30% discount and with a yield of 7%, this company is an incredibly good buy.
Would you like to learn more about REITs and other forms of real estate investing? If so, we would love to hear from you! Contact our office today.