Q: Can I get your thoughts on this pref. share? what are the main risk factors for the share price to decrease?
Yielding about 10% from a well established and funded company, share prices may be trading at a discount?
Yielding about 10% from a well established and funded company, share prices may be trading at a discount?
5i Research Answer:
The main risk is weak growth and high vacancies in the office space. While it is endorsed by Brookfield, it is a legally separate entity, and there is no 'guarantee' by the parent company. Cash flow has to cover interest payments and dividends. It has no common shares as the company was bought out by Brookfield but the preferred shares were left outstanding. We think it needs to be considered higher than average risk, but we think this is priced into the valuation.