Brookfield Property Partners swings to Q4 loss despite improved investment activity

·3 min read

TORONTO — Brookfield Property Partners LP says it swung to a loss in its latest quarter despite seeing a significant pickup in private real estate investment activity.

"Institutional investors continue to rotate capital from fixed income investments into real assets that generate long-term derisked yield," CEO Brian Kingston said Tuesday on an earnings call.

The real estate company, which keeps its books in U.S. dollars, says it lost $38 million or 40 cents per unit for the quarter ended Dec. 31.

That compared with a profit of $1.55 billion or $1 per unit in the same quarter a year earlier when it benefited from higher valuation gains, as well as strong performance in several of its investments.

Company funds from operations and realized gains totalled $287 million or 30 cents per unit, down from $459 million or 48 cents per unit in the same quarter a year earlier.

Kingston said the company is encouraged by markets such as China, South Korea and the Middle East, which have seen occupancy return to normal.

While shopper traffic in its malls has not yet recovered to historic levels, all centres remain open and many key tenants reported 2020 sales figures that compare favourably with 2019 holiday numbers.

"A silver lining to the restrictions put in place during the pandemic is that there is significant pent-up demand for consumer spending given the savings that people have accumulated over the past nine months," Kingston told analysts.

The US$900 billion stimulus approved by Congress in December will help consumers and retailers, he added.

Retailers have increasingly used their stores for distribution of purchases made online, with this activity growing about 500 per cent since the beginning of the pandemic.

"While the showroom area of the store may shrink, retailers are using more space for inventory returns and fulfilment, making the distribution channel itself less relevant, but the location of its physical real estate, more important than ever," Kingston said

Meanwhile, he said Brookfield is pursuing a third-party verified health safety rating for all of its North American buildings to ensure that it's "at the forefront of the industry in a post-pandemic environment."

For the full-year, Brookfield Property Partners lost $2.5 billion or $2.39 per unit, compared with a profit of $3.16 billion or $1.89 per unit in 2019.

Company funds from operations and realized gains totalled $952 million or 97 cents per unit, versus $1.51 billion or $1.57 per unit a year earlier.

Brookfield Asset Management Inc. offered US$5.9 billion last month to buy the stake in Brookfield Property Partners that it does not already own.

Brookfield Property Partners says a special committee of independent directors has hired external legal and financial advisers and they are considering the proposal worth US$16.50 per unit.

The company holds a diverse real estate portfolio of properties around the world.

This report by The Canadian Press was first published Feb. 2, 2021.

Companies in this story: (TSX:BPY.UN, TSX:BAM.A)

The Canadian Press