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Why Brookfield Property Partners Stock Crashed 50.6% in March

By Neha Chamaria - Apr 5, 2020 at 5:14PM

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The coronavirus lockdown has cast a shadow over the real-estate company's business.

What happened

Investors in Brookfield Property Partners (BPY) couldn't have seen this coming: Shares of the real-estate management company crashed a shocking 50.6% in March, according to data provided by S&P Global Market Intelligence.

So what

Brookfield provided its first COVID-19 update, or precisely how the pandemic could affect its business, on March 20. The stock, however, was already in a freefall by then, as fears of coronavirus lockdowns on the various properties owned by the company spooked investors.

Brookfield has roughly $200 billion worth of assets under management and operates more than 450 million square feet in properties, primarily across office, retail, multifamily, and hospitality sectors. Over March, many malls, restaurants, and offices cut working hours or shut down as stricter lockdowns were imposed.

An empty shopping cart in a grocery store aisle.

Image source: Getty Images.

Brookfield has huge stake in office and retail properties, with core office contributing almost 70% to its net income in 2019. What the market is worried about, though, is the other part of Brookfield's business: its core retail portfolio that consists of malls, restaurants, and entertainment properties. The COVID-19 pandemic has only strengthened the retail apocalypse narrative, triggering fears that many brick-and-mortar stores may not survive the lockdown effect as more customers flock to the comforts of online shopping and stick with it.

Now what

Brookfield Property has the backing of parent Brookfield Asset Management (BAM -1.09%), which is a great advantage to have in such challenging times. Brookfield Asset Management itself released a statement last month, highlighting its liquidity position to convince investors of its capability to ride out the storm.

That said, Brookfield Property's line of business is among the ones that could be hit severely because of coronavirus repercussions, which is why investors' fears seem justified even if the stock has fallen far too much, too quickly.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

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Brookfield Asset Management Inc. Stock Quote
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$53.13 (-1.09%) $0.58
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