Brookfield CEO says the company is undervalued up to 40% of the public market

Brookfield Asset ManagementThe top executive is frustrated by the public market’s assessment of his business.

BAM CEO Bruce Flatt believes the private equity investment giant should be valued at around $ 57 per share. share rather than the price of $ 42.50 per share. stock, it played when the trade opened Monday, he said in a statement about BAMs 4th quarter earnings report last week. Flatt attributed the nearly 40% discount to investor sentiment influenced by news and world events outside the company itself.

“Price is a function of supply and demand at all times, which is often affected by today’s news, short-term results and the investor’s view of macro events that often have nothing to do with the company,” Flatt said in his statement. “This has always been true, and it is even more so today with the advent of [exchange-traded funds], indexing, social media, 24-hour news cycle and all the information that bombards investors. ”

The perceived disruption between a company’s true value and stock price is also running BAM’s trials to take on its largest real estate-focused subsidiary, Brookfield Property Partnersprivately by paying a proposed $ 5.9m for the 35% of REIT that it does not already own. The board of directors of Brookfield Property Partners is reportedly still considering the offer that was published in early January, Crain’s New York Business Reports.

Brookfield property lost $ 2B in 2020, mainly due to the steep decline in the value of retail properties, and BAM management believes that private ownership would allow the company to make bolder decisions on the sale or redevelopment of flagging assets. If the acquisition is successful, BAM will seek to radically reduce Brookfield Property’s portfolio, Flatt said in his statement.

Part of Flatt’s belief in the value of BAM could stem from his optimism that the office market will recover from pandemic conditions much faster than consensus predictions think. Meanwhile, the large office occupants continue to bring their workers back, in some cases indefinitely, Wall Street Journal reports.

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