After $1.5B loss, Brookfield Property Partners buys back $426M of stock

Mall operator missed deadline to pay off $282M in CMBS debt secured by Virginia property

National Insights /
Sep.September 03, 2020 03:35 PM
A photo illustration of Brookfield's Brian Kingston (Brookfield, iStock)

A photo illustration of Brookfield’s Brian Kingston (Brookfield, iStock)

Burdened with debt and non-paying tenants, one of the biggest mall operators in the country just poured $426 million into its own stock.

Brookfield Property Partners (BPY) bought back 35.5 million shares at a fixed price of $12 per share, according to documents filed with the SEC today. BPY’s share price has not been north of $12 since early June.

Brookfield funded the buyback by drawing from a $1 billion equity commitment from its parent company, Brookfield Asset Management. Half of the money came from cash on hand and the remainder from institutional investor accounts managed by Brookfield Asset Management.

Tenants at Brookfield’s retail properties only paid 34 percent of rent in the second quarter, and the company reported a net loss of $1.5 billion for the quarter. Earlier this week it was reported that Brookfield would miss the deadline to pay off $282 million in debt on the high-end Virginia’s Tysons Galleria mall in McClean, Virginia, after the commercial mortgage-backed securities loan was sent to a special servicer.

Repurchasing stock is a popular option for companies with extra cash but not inclined to spend it on growth. Buybacks reduce the number of shares outstanding on the market, thus increasing earnings per share and often the stock price as well — which can trigger executive bonuses.

Repurchases also represent a company’s investment in itself, and are a bet executives make when they perceive the firm’s stock is undervalued.


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