Brookfield Asset Management: Will Recent Dealings Pay Off?

Brookfield Asset Management Inc. (BAM.A) is a global alternative-asset manager, with over $600 billion of assets under management.

The company made two interesting announcements in July, both focused on real estate assets, in order to compete with rivals such as Blackstone Group Inc. (BX) and Starwood Property (STWG).

Brookfield owns and operates long-life assets and businesses, many of which form the backbone of the global economy. I am bullish on the stock. (See BAM.A stock charts on TipRanks)

Oaktree REIT to Brookfield REIT

On July 15, Brookfield announced that is was transitioning the advisory role of Oaktree Real Estate Income Trust to an affiliate of Brookfield. Brookfield had previously bought 62% of Oaktree Capital Management in 2019.

As part of the agreement, Brookfield will contribute to the REIT its three multifamily and office properties, which have a combined value of over $400 million.

The new units of the REIT will be distributed by Oaktree Wealth Solutions, which is an alternative investment platform catering to individual, high-net-worth investors.

The transition is expected to occur in the fourth quarter of 2021.

Brookfield Property Partners Privatization

On July 26, Brookfield announced that it had privatized its subsidiary, Brookfield Property Partners, in a $6.5-billion deal.

“We are pleased to have reached agreement with BPY’s independent directors on a transaction we believe is appealing to BPY unitholders in many aspects and allows for greater optionality in how we manage our portfolio of high-quality real estate assets,” Nick Goodman, CFO of Brookfield Asset Management, said.

Brookfield Property Partners owns, operates, and develops one of the largest real estate portfolios in the world. The deal comes at a time where the global pandemic has left office buildings and malls empty due to widespread stay-at-home orders.

It stands to reason that BAM.A believes some of Brookfield Property Partners’ assets were undervalued by the general market.

Bottom Line

Brookfield, as well as other real estate investors, continues to bolster its portfolio during a time when real estate occupancy and mall traffic has seen its worst.

The global pandemic has provided the opportunity for long-term investors and operators of real estate assets to acquire real estate during significant disruption, at potentially attractive valuations. As the global vaccine rollout continues, and FDA approvals are earned, real estate investors can begin to see the light at the end of the tunnel, as they expect occupancy to return, and valuations to improve.

What Analysts are Saying about BAM.A Stock

From Wall Street analysts, BAM.A earns a Strong Buy consensus rating, based on six Buy ratings and one Hold rating. Additionally, the average BAM.A price target of C$76.39 puts the upside potential at 7.9%.

Disclosure: On the date of publication, Sean Tascatan had no position in any of the companies discussed in this article.

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