3 Dividend Stocks That Are Easy Money
More on: Image source: Getty Images
We all make financial mistakes. Some of us don’t save enough for our retirements, while others spend more than they have. But one of the most common financial mistakes most people make is that we don’t create passive-income streams for ourselves and rely quite heavily on a single income source. It’s not necessarily a bad thing, but in this volatile economy, it can be devastating if you lost that single source of income.
There are several ways of creating an alternative income stream. Some of those ways require you to have a hefty amount of capital (like real estate), while others might be a bit risky (growth stock). Some investments also require you to take an active part in “managing” the investment.
Mall values fell 60% in 2020 after appraisals triggered by debt or delinquency, affecting landlords like Brookfield Property Partners and Simon Property Group.
Brookfield Is Raising Big Money For New Real Estate Funds Brookfield s Bruce Flatt
Brookfield Asset Management has begun the process of raising its next giant opportunity fund to buy underpriced real estate and has raked in new capital for a fund to provide debt to real estate owners.
Speaking after BAM’s 2020 results earlier this month, Chief Executive Bruce Flatt said the firm is in the market raising capital for the follow on to Brookfield Strategic Real Estate Partners III, which raised $15B in equity between 2017 and the start of 2019.
Flatt gave no details of fund size, but such funds are typically the same size or bigger than their predecessor, as long as the predecessor makes a good return. Brookfield said in December it was projecting the third fund would make a 19% gross internal rate of return and a gross multiple on invested capital of two times.
The valuation for about two-thirds of Simon Property Group’s Crystal Mall in Waterford, Connecticut was slashed 87 percent to just $18.7 million, a sign of just how bad things are for many suburban shopping centers.
About 518,000 square feet of the property backed a $95 million commercial mortgage-backed securities loan, according to Trepp. With the new appraisal, the loan-to-value ratio comes to an eye-popping 508 percent, meaning the mall’s debt is worth about five times more than a majority of the mall.
That piece of the property was appraised at $153 million in 2012.
The appraisal reduction is hardly a surprise: A report from Kroll Bond Rating Agency in November noted that Simon was planning to hand over the keys to the Crystal Mall, along with three other shopping centers, to its lenders.
Brian Kingston of Brookfield Property Partners (left) and Bruce Flatt of Brookfield Asset Management
There are several reasons why taking Brookfield Property Partners private might be a bad deal. The company’s investors lose a lucrative dividend, hundreds of millions of dollars worth of fees to its parent Brookfield Asset Management go by the wayside and the Brookfield empire gives up an established line to the public markets.
But privatization gives Brookfield something more valuable than money: time.
It allows the company, one of the world’s largest commercial real estate investors, a chance to reconfigure its extensive mall portfolio, which has been walloped by the pandemic. It also lets Brookfield Asset Management buy its real estate subsidiary’s outstanding shares at $16.50 per share, a steep discount from the $27.50 the company claims they are worth.