Brookfield Property Getting Bought Out – New Diversified Etf

Brookfield Property

Brookfield Property Getting Bought Out – New Diversified Etf

Hey everyone

Unfortunately I woke up Monday morning to the news of Bam and other institutional investors wanting to take Brookfield Property Partners Private. I enjoyed the stock and it paid very well while waiting for its stock price to rebound.

This stock was too cheap and Bruce Flatt said earlier in the year this one is a easy double in the coming years. He put his money where his mouth is though and are now going to make bpy private. They are getting these stocks dirt cheap at 16.50 usd per share in my opinion.

On the plus side this was a premium of 14.9% on the closing price of Brookfield Property Partners on December 31st.

On Monday the stock price actually surpassed that 16.50 usd mark, and we took advantage and sold off our entire position. In total we sold 287 shares at 21.57 per share Canadian. After trading fees we locked in a roughly 1% gain plus the dividends over our holding period. (Like I said earlier I think this buyout was too cheap, but times are different now and retail and office are undervalued at the moment.)

At the same time my portfolio of reits is extremely retail heavy. Its basically reits with a side of offices. So for diversification it’s not that bad to exit this position and diversify more in the real estate space.

I wanted to keep the funds in the same sector to not throw my sector diversification out of whack. For awhile I was playing with the idea of starting a position in Canadian Apartment Reit’s but the yield is so low and it will take a lot of capital to get that one to drip at current prices. I also would be lacking industrial reits moving forward.

I have also kept debating maybe selling all our reits brookfield property, riocan and even smart centers to just put it in some etf.. But riocan is still down a nice chunk. Smart Im up 15% but I think both are still undervalued and in time they will recover.

Considering the lack of dividend growth and overall beat down sector. I decided to go the etf route moving forward in the reit space. I like the idea of holding a basket of reits (from industrial,residential,office and retail) a great starting yield (lower than bpy was though) and monthly compounding.

CI First Asset Reit – RIT

Now the question was which fund….. xre and zre come to mind in the Canadian Reit Etf Space.

But I remembered my buddy Dale @cutthecrapinvesting did a post comparing the Canadian Reit etf Space and both those were outperformed by one fund.

From Dales Site

Honestly this was a fund I have never even heard of but the results speak for themselves.

I can try to talk about rit etf as much as I want but Dale did a great write up and I think you would be better off reading his post comparing the bunch. Find that post Here.

Now the biggest downside you will find right off the bat is the management expense ratio.

  • Rit sports a mer of .87%
  • xre – .61 mer
  • zre – .61 mer

We have all been trained to lower fees on our investments. So why would I go with the highest one. 1 – Clearly the better performance and 2 I already hold smart and riocan.

xre currently has riocan as their 2nd largest holding (9.85%) and smart as their 8th (5.49%).

zre currently has smart centres as their 10th largest holding at 4.27% of net assets

Rit currently has neither of them in their top 10.

All these etfs pay monthly which is a huge bonus for compounding. At current prices zre has the largest starting dividend yield at 5.05% followed by Rit @ 4.98% and then xre at 4.57%

Xre does have 2 times the market cap of both Rit and Zre though. If that’s something you consider, but zre and rit are no small fry’s at about 550 million each.

The Purchase

The sale of Bpy stock left me with $6,180 bucks to play with but also lowered our forward dividend income by 373 bucks a year… I wanted to keep things even but obviously with rit’s lower starting yield I had to put more cash in.

We had 400 sitting in the account sitting idle from dividend payments and I to another 1000 in to make things even.

In total we deployed roughly $7,650 to buy 469 units of Rit Etf. This should bring in $31.65 a month or 379.89 per year. A gain of 6 bucks! It also will bring in 1 Drip per month at current prices.

Not massive by any means but certainly strengthens the portfolio moving forward as we are a lot more diversified in the reit space.


Moving forward in 2021 I still debate what to do with our extendicare position (I’d toss it but we are down 30%) things could either get worse as covid continues or better as covid passes. (Id sell it then at less of a loss, no dividend growth)

I’m also debating selling bmo and national bank to move into rbc (wide moat) or just selling bmo and beef up that national bank position. National Bank and Bmo have done well for us, especially na but we don’t need 4 different Canadian banks, I prefer 3 chunky positions.

Interpipeline is another one I debate but they are just too cheap that I may add here. Heartland project will be huge for them once the project is complete. Especially now that JamesB pointed out that Pembina is suspending their petrochemical project indefinitely. Thanks again James!

Other than those I like the look of our portfolio and will continue on focusing to grow existing positions.


At the end of the day I wasn’t planning on selling our brookfield property shares, but it is what it is. Bam is getting them at a great price. Atleast we made a profit on them and collected that 9% dividend for a year or 2. I feel good buying this etf, in these uncertain times its a good idea to be diversified.

Im curious what do you think of these moves and what would you do with the bank stocks or exe?

Have a great one


5 Responses

  1. Ed says:

    Just wondering why you didn’t compare with VRE?

    • Rob says:

      hey Ed

      Think we talked about this on twitter but could be wrong.
      Not one that popped in my head.

      Smallest market cap of the 4 at 262 million, 3.77% dividend yield, (That must of dropped since yesterday) .lowest mer fees at .39% which is nice but they own alot of riocan and smart centres at almost 16% of the portfolio. Which Im trying to avoid as I own them as individual stocks still.

      Hope that helps
      cheers Ed!

  2. John says:

    Hi Rob,

    I think the BPY decision is an interesting choice. If BAM management is interested, clearly they think they are getting the underlying assets at a good price (BAM’s MO is definitely contrarian in the PE space). Bringing BPY in house will allow the results to be somewhat less front and centre in the quarterly reporting (as a much smaller piece of BAM’s total activities), and lower the quarterly cash distribution requirements by capping the pref issuance associated with the transactions.

    While there isn’t an actual formal offer yet, BPY’s relationship to BAM probably means that this thing is in the bag eventually. I wouldn’t be surprised if the offer was sweetened slightly, but to me, taking the cash now or rolling the holding into BAM shares are both reasonable reactions.

    I’m staying put for now, but will consider liquidating and redeploying the capital elsewhere, and adding some BAM.A somewhere down the line to maintain some exposure to the RE portfolio.



    • Rob says:

      Hey John

      Good points. Buying bam is probably not a bad idea, but the yield and div growth both are pretty low. Definitely what you said about them wrapping all those properties in their portfolio brings less attention to how well they are doing makes sense.
      Kinda miss owning Atlantis Bahamas already… =)

      Maybe one day Ill start a position in bam but this time I wanted to keep that real estate sector exposure and not feel a huge hit to our income.
      Cheers John!

  3. John says:

    Nice Rob,

    A name I am looking at as an alternative is Killiam Apartment REIT: in the residential space, which I like very much compared to commercial, and more reasonably priced than CAR. I also happen to live close to one of their developments where they are building a new rental tower, so I figure if I have to put up with construction noise, I may as well get paid too lol!


Id love to Hear What You Think

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