Brookfield Property Partners Announces Commencement of Normal Course Issuer Bid to Purchase Preferred Units

Rhea-AI Summary

Brookfield Property Preferred L.P. (BPYP.PR.A; BPYPM) has received approval from the Toronto Stock Exchange for a normal course issuer bid to purchase up to 10% of the public float of its outstanding Class A Cumulative Redeemable Preferred Units, Series 1. At December 31, 2023, there were 26,844,556 Preferred Units issued and outstanding, with 7,667,101 Preferred Units held by insiders, giving Brookfield a public float of 19,177,455 limited partnership units. Brookfield may purchase up to 1,917,745 Preferred Units, representing approximately 10% of its public float, during the 12-month period commencing January 11, 2024. The company has not repurchased any Preferred Units in the past 12 months. Brookfield is commencing this normal course issuer bid because it believes that the market price of its Preferred Units may not fully reflect the underlying value of its current business and future prospects, making the outstanding Preferred Units an attractive investment for the company.

Insights

Market Analyst

Brookfield Property Preferred L.P.'s announcement of a normal course issuer bid (NCIB) to repurchase up to 10% of its public float of Class A Cumulative Redeemable Preferred Units is a strategic move that reflects the management's belief in the company's undervaluation. The decision to buy back shares is often interpreted by the market as a positive signal, suggesting that the company is confident about its financial health and future prospects. The repurchase plan could potentially lead to a contraction in the supply of available securities in the market, which, all else being equal, may result in a price increase for the remaining units.

However, investors should consider the opportunity cost of using the company's cash reserves for share repurchases as opposed to other investments or debt reduction. The market's response to such a buyback will depend on its perception of the company's ability to generate long-term value through this use of capital. It's also important to note the limitation of daily repurchase volumes to 25% of the average daily trading volume, which is designed to minimize the impact on the market price of the units.

Financial Analyst

The financial implications of Brookfield's NCIB must be evaluated in the context of the company's overall capital allocation strategy. By repurchasing its Preferred Units, the company is effectively signaling to the market that it believes its units to be undervalued. This can be a double-edged sword; on one hand, it could provide a temporary boost to the unit price, benefiting existing unitholders. On the other hand, it reduces the company's cash on hand, which could be used for other value-creating opportunities or to maintain a buffer against potential downturns.

Brookfield's plan to potentially enter into an automatic purchase plan to facilitate the buyback during its internal trading black-out periods suggests a well-thought-out strategy to maintain compliance with insider trading regulations while executing its repurchase strategy. This level of planning is indicative of a proactive approach to capital management.

Legal Expert

From a legal standpoint, Brookfield's approach to its NCIB is structured to comply with both the TSX's requirements and Canadian securities law. The company's adherence to a daily purchase limit of 25% of the average daily trading volume is a regulatory measure to prevent market manipulation. Furthermore, the possibility of implementing an automatic purchase plan is a compliance strategy that allows the company to continue its repurchase program without falling afoul of insider trading rules during blackout periods.

Investors should be reassured by Brookfield's commitment to transparency and compliance, as evidenced by its communication strategy regarding the automatic purchase plan and its execution within the bounds of the law. This reduces the legal risk associated with the NCIB and provides a framework within which the company can operate to enhance shareholder value.

BROOKFIELD NEWS, Jan. 09, 2024 (GLOBE NEWSWIRE) -- Brookfield Property Preferred L.P. (“Brookfield”) today announced it has received approval from the Toronto Stock Exchange (“TSX”) for a normal course issuer bid to purchase up to 10% of the public float of its outstanding Class A Cumulative Redeemable Preferred Units, Series 1 (TSX: BPYP.PR.A; Nasdaq: BPYPM) that are listed on the TSX (the “Preferred Units”). Brookfield may, during the 12-month period commencing January 11, 2024 and ending on January 10, 2025 (or an earlier date should Brookfield complete its purchases prior to such date), purchase on the TSX, the Nasdaq Stock Market and any alternative Canadian trading system, up to 1,917,745 Preferred Units, representing approximately 10% of its public float. At December 31, 2023, there were 26,844,556 Preferred Units issued and outstanding, with 7,667,101 Preferred Units held by insiders, giving Brookfield a public float of 19,177,455 limited partnership units. Under the normal course issuer bid, Brookfield may purchase up to 1,138 Preferred Units on the TSX during any trading day, which represents approximately 25% of the average daily trading volume of 4,552 on the TSX for the most recently completed six calendar months prior to the TSX’s acceptance of the notice of the normal course issuer bid. This limitation does not apply to purchases made pursuant to block purchase exemptions and purchases made on another exchange. Brookfield will pay the market price at the time of acquisition for any Preferred Units purchased, but not to exceed the redemption price thereof as stated in the company’s limited partnership agreement. All Preferred Units acquired by Brookfield under this bid will be cancelled. Brookfield has not repurchased any Preferred Units in the past 12 months.

Brookfield is commencing this normal course issuer bid because it believes that, from time to time, the market price of its Preferred Units may not fully reflect the underlying value of its current business and future prospects. Brookfield believes that, in such circumstances, the outstanding Preferred Units represent an attractive investment for the company, since a portion of its excess cash generated on an annual basis can be invested for an attractive risk-adjusted return through the normal course issuer bid.

Brookfield may enter into an automatic purchase plan in relation to the normal course issuer bid that would allow for the purchase of Preferred Units, subject to certain trading parameters, at times when Brookfield ordinarily would not be active in the market due to its own internal trading black-out period, insider trading rules or otherwise. Any such plan entered into with Brookfield’s broker will be adopted in accordance with applicable Canadian securities law and will be announced in a press release. Outside of these periods, Preferred Units will be repurchased in accordance with management’s discretion and in compliance with applicable law.

About Brookfield Property Partners

Brookfield Property Partners is one of the world’s premier real estate companies. We own and operate iconic properties in the world’s major markets, and our global portfolio includes office, retail, multifamily, logistics, hospitality, single-family rentals, manufactured housing, student housing and self-storage.

Brookfield Property Partners is a subsidiary of Brookfield Corporation (NYSE: BN, TSX: BN). More information is available at www.brookfield.com.

Brookfield Contact:

Keren Dubon
Investor Relations
Tel.: (212) 618-3440
Email: keren.dubon@brookfield.com

FAQ

What is the normal course issuer bid announced by Brookfield Property Preferred L.P.?

Brookfield Property Preferred L.P. has announced a normal course issuer bid to purchase up to 10% of the public float of its outstanding Class A Cumulative Redeemable Preferred Units, Series 1.

How many Preferred Units can Brookfield purchase during the 12-month period commencing January 11, 2024?

Brookfield may purchase up to 1,917,745 Preferred Units, representing approximately 10% of its public float, during the 12-month period commencing January 11, 2024.

Why is Brookfield commencing this normal course issuer bid?

Brookfield is commencing this normal course issuer bid because it believes that the market price of its Preferred Units may not fully reflect the underlying value of its current business and future prospects.

How many Preferred Units were issued and outstanding at December 31, 2023?

At December 31, 2023, there were 26,844,556 Preferred Units issued and outstanding, with 7,667,101 Preferred Units held by insiders, giving Brookfield a public float of 19,177,455 limited partnership units.

Has Brookfield repurchased any Preferred Units in the past 12 months?

Brookfield has not repurchased any Preferred Units in the past 12 months.