Intrinsic value of Brookfield Property Partners - BPY

Previous Close

$24.26

  Intrinsic Value

$76.87

stock screener

  Rating & Target

str. buy

+217%

  Value-price divergence*

-42%

Previous close

$24.26

 
Intrinsic value

$76.87

 
Up/down potential

+217%

 
Rating

str. buy

 
Value-price divergence*

-42%

Our model is not good at valuating stocks of financial companies, such as BPY.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BPY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 6.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.28
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  5,352
  6,101
  6,901
  7,749
  8,644
  9,587
  10,576
  11,611
  12,691
  13,817
  14,990
  16,210
  17,478
  18,796
  20,166
  21,589
  23,069
  24,607
  26,207
  27,871
  29,604
  31,408
  33,287
  35,247
  37,290
  39,422
  41,648
  43,973
  46,402
  48,940
  51,595
Variable operating expenses, $m
 
  4,096
  4,622
  5,181
  5,771
  6,392
  7,043
  7,725
  8,437
  9,179
  9,951
  10,679
  11,514
  12,383
  13,285
  14,223
  15,197
  16,211
  17,265
  18,361
  19,502
  20,691
  21,929
  23,220
  24,566
  25,971
  27,437
  28,969
  30,569
  32,241
  33,990
Fixed operating expenses, $m
 
  1,384
  1,418
  1,454
  1,490
  1,527
  1,566
  1,605
  1,645
  1,686
  1,728
  1,771
  1,816
  1,861
  1,908
  1,955
  2,004
  2,054
  2,106
  2,158
  2,212
  2,267
  2,324
  2,382
  2,442
  2,503
  2,565
  2,630
  2,695
  2,763
  2,832
Total operating expenses, $m
  4,921
  5,480
  6,040
  6,635
  7,261
  7,919
  8,609
  9,330
  10,082
  10,865
  11,679
  12,450
  13,330
  14,244
  15,193
  16,178
  17,201
  18,265
  19,371
  20,519
  21,714
  22,958
  24,253
  25,602
  27,008
  28,474
  30,002
  31,599
  33,264
  35,004
  36,822
Operating income, $m
  431
  622
  860
  1,114
  1,383
  1,668
  1,967
  2,281
  2,609
  2,953
  3,311
  3,760
  4,148
  4,553
  4,973
  5,412
  5,867
  6,342
  6,837
  7,352
  7,889
  8,449
  9,034
  9,645
  10,282
  10,949
  11,646
  12,375
  13,138
  13,937
  14,773
EBITDA, $m
  671
  811
  1,064
  1,333
  1,619
  1,921
  2,238
  2,571
  2,920
  3,284
  3,663
  4,059
  4,471
  4,899
  5,346
  5,810
  6,293
  6,796
  7,320
  7,866
  8,435
  9,029
  9,648
  10,295
  10,970
  11,676
  12,414
  13,186
  13,994
  14,840
  15,725
Interest expense (income), $m
  1,383
  1,379
  1,779
  2,221
  2,690
  3,185
  3,706
  4,253
  4,825
  5,422
  6,045
  6,693
  7,368
  8,069
  8,798
  9,555
  10,342
  11,160
  12,010
  12,895
  13,815
  14,773
  15,770
  16,809
  17,893
  19,022
  20,201
  21,432
  22,717
  24,060
  25,463
Earnings before tax, $m
  2,142
  -757
  -919
  -1,107
  -1,307
  -1,518
  -1,739
  -1,972
  -2,216
  -2,470
  -2,734
  -2,934
  -3,220
  -3,516
  -3,824
  -4,144
  -4,475
  -4,818
  -5,174
  -5,543
  -5,926
  -6,323
  -6,736
  -7,165
  -7,610
  -8,073
  -8,555
  -9,057
  -9,579
  -10,123
  -10,690
Tax expense, $m
  -575
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  660
  -757
  -919
  -1,107
  -1,307
  -1,518
  -1,739
  -1,972
  -2,216
  -2,470
  -2,734
  -2,934
  -3,220
  -3,516
  -3,824
  -4,144
  -4,475
  -4,818
  -5,174
  -5,543
  -5,926
  -6,323
  -6,736
  -7,165
  -7,610
  -8,073
  -8,555
  -9,057
  -9,579
  -10,123
  -10,690

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,456
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  78,127
  87,161
  98,579
  110,695
  123,492
  136,959
  151,085
  165,866
  181,299
  197,388
  214,140
  231,567
  249,685
  268,516
  288,085
  308,420
  329,557
  351,530
  374,383
  398,160
  422,908
  448,681
  475,534
  503,525
  532,718
  563,178
  594,976
  628,184
  662,881
  699,147
  737,069
Adjusted assets (=assets-cash), $m
  76,671
  87,161
  98,579
  110,695
  123,492
  136,959
  151,085
  165,866
  181,299
  197,388
  214,140
  231,567
  249,685
  268,516
  288,085
  308,420
  329,557
  351,530
  374,383
  398,160
  422,908
  448,681
  475,534
  503,525
  532,718
  563,178
  594,976
  628,184
  662,881
  699,147
  737,069
Revenue / Adjusted assets
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
  0.070
Average production assets, $m
  571
  653
  738
  829
  925
  1,026
  1,132
  1,242
  1,358
  1,478
  1,604
  1,734
  1,870
  2,011
  2,158
  2,310
  2,468
  2,633
  2,804
  2,982
  3,168
  3,361
  3,562
  3,771
  3,990
  4,218
  4,456
  4,705
  4,965
  5,237
  5,521
Working capital, $m
  -4,164
  -598
  -676
  -759
  -847
  -940
  -1,036
  -1,138
  -1,244
  -1,354
  -1,469
  -1,589
  -1,713
  -1,842
  -1,976
  -2,116
  -2,261
  -2,411
  -2,568
  -2,731
  -2,901
  -3,078
  -3,262
  -3,454
  -3,654
  -3,863
  -4,082
  -4,309
  -4,547
  -4,796
  -5,056
Total debt, $m
  33,519
  41,379
  51,655
  62,559
  74,077
  86,197
  98,911
  112,213
  126,103
  140,583
  155,660
  171,344
  187,651
  204,599
  222,210
  240,512
  259,535
  279,311
  299,879
  321,278
  343,552
  366,747
  390,914
  416,107
  442,380
  469,794
  498,412
  528,300
  559,527
  592,167
  626,296
Total liabilities, $m
  70,585
  78,445
  88,721
  99,625
  111,143
  123,263
  135,977
  149,279
  163,169
  177,649
  192,726
  208,410
  224,717
  241,665
  259,276
  277,578
  296,601
  316,377
  336,945
  358,344
  380,618
  403,813
  427,980
  453,173
  479,446
  506,860
  535,478
  565,366
  596,593
  629,233
  663,362
Total equity, $m
  7,542
  8,716
  9,858
  11,069
  12,349
  13,696
  15,109
  16,587
  18,130
  19,739
  21,414
  23,157
  24,969
  26,852
  28,808
  30,842
  32,956
  35,153
  37,438
  39,816
  42,291
  44,868
  47,553
  50,353
  53,272
  56,318
  59,498
  62,818
  66,288
  69,915
  73,707
Total liabilities and equity, $m
  78,127
  87,161
  98,579
  110,694
  123,492
  136,959
  151,086
  165,866
  181,299
  197,388
  214,140
  231,567
  249,686
  268,517
  288,084
  308,420
  329,557
  351,530
  374,383
  398,160
  422,909
  448,681
  475,533
  503,526
  532,718
  563,178
  594,976
  628,184
  662,881
  699,148
  737,069
Debt-to-equity ratio
  4.444
  4.750
  5.240
  5.650
  6.000
  6.290
  6.550
  6.770
  6.960
  7.120
  7.270
  7.400
  7.520
  7.620
  7.710
  7.800
  7.880
  7.950
  8.010
  8.070
  8.120
  8.170
  8.220
  8.260
  8.300
  8.340
  8.380
  8.410
  8.440
  8.470
  8.500
Adjusted equity ratio
  0.079
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  660
  -757
  -919
  -1,107
  -1,307
  -1,518
  -1,739
  -1,972
  -2,216
  -2,470
  -2,734
  -2,934
  -3,220
  -3,516
  -3,824
  -4,144
  -4,475
  -4,818
  -5,174
  -5,543
  -5,926
  -6,323
  -6,736
  -7,165
  -7,610
  -8,073
  -8,555
  -9,057
  -9,579
  -10,123
  -10,690
Depreciation, amort., depletion, $m
  240
  189
  203
  219
  236
  253
  271
  290
  310
  331
  353
  299
  322
  347
  372
  398
  426
  454
  483
  514
  546
  579
  614
  650
  688
  727
  768
  811
  856
  903
  952
Funds from operations, $m
  431
  -568
  -716
  -888
  -1,071
  -1,265
  -1,468
  -1,682
  -1,905
  -2,139
  -2,382
  -2,635
  -2,897
  -3,170
  -3,452
  -3,745
  -4,049
  -4,364
  -4,690
  -5,029
  -5,380
  -5,744
  -6,122
  -6,514
  -6,922
  -7,346
  -7,787
  -8,246
  -8,723
  -9,220
  -9,738
Change in working capital, $m
  -314
  -73
  -78
  -83
  -88
  -92
  -97
  -101
  -106
  -110
  -115
  -120
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -260
Cash from operations, $m
  745
  -495
  -637
  -805
  -983
  -1,172
  -1,371
  -1,581
  -1,800
  -2,028
  -2,267
  -2,515
  -2,773
  -3,040
  -3,318
  -3,606
  -3,904
  -4,213
  -4,533
  -4,866
  -5,210
  -5,567
  -5,938
  -6,322
  -6,722
  -7,137
  -7,569
  -8,018
  -8,485
  -8,971
  -9,478
Maintenance CAPEX, $m
  0
  -98
  -113
  -127
  -143
  -159
  -177
  -195
  -214
  -234
  -255
  -277
  -299
  -322
  -347
  -372
  -398
  -426
  -454
  -483
  -514
  -546
  -579
  -614
  -650
  -688
  -727
  -768
  -811
  -856
  -903
New CAPEX, $m
  -7,926
  -82
  -86
  -91
  -96
  -101
  -106
  -111
  -116
  -121
  -125
  -131
  -136
  -141
  -147
  -152
  -158
  -165
  -171
  -178
  -185
  -193
  -201
  -210
  -219
  -228
  -238
  -249
  -260
  -272
  -284
Cash from investing activities, $m
  -3,234
  -180
  -199
  -218
  -239
  -260
  -283
  -306
  -330
  -355
  -380
  -408
  -435
  -463
  -494
  -524
  -556
  -591
  -625
  -661
  -699
  -739
  -780
  -824
  -869
  -916
  -965
  -1,017
  -1,071
  -1,128
  -1,187
Free cash flow, $m
  -2,489
  -675
  -835
  -1,023
  -1,222
  -1,432
  -1,654
  -1,886
  -2,129
  -2,383
  -2,647
  -2,922
  -3,208
  -3,504
  -3,811
  -4,130
  -4,461
  -4,803
  -5,159
  -5,527
  -5,909
  -6,306
  -6,718
  -7,146
  -7,591
  -8,053
  -8,534
  -9,035
  -9,556
  -10,099
  -10,665
Issuance/(repayment) of debt, $m
  2,036
  9,316
  10,276
  10,904
  11,518
  12,120
  12,714
  13,303
  13,890
  14,480
  15,077
  15,684
  16,307
  16,948
  17,612
  18,302
  19,023
  19,777
  20,568
  21,399
  22,274
  23,196
  24,167
  25,192
  26,273
  27,414
  28,618
  29,888
  31,227
  32,640
  34,129
Issuance/(repurchase) of shares, $m
  2,791
  1,931
  2,061
  2,319
  2,586
  2,864
  3,152
  3,450
  3,759
  4,079
  4,410
  4,676
  5,031
  5,399
  5,781
  6,177
  6,588
  7,015
  7,459
  7,920
  8,401
  8,901
  9,421
  9,964
  10,529
  11,119
  11,735
  12,378
  13,049
  13,750
  14,482
Cash from financing (excl. dividends), $m  
  2,906
  11,247
  12,337
  13,223
  14,104
  14,984
  15,866
  16,753
  17,649
  18,559
  19,487
  20,360
  21,338
  22,347
  23,393
  24,479
  25,611
  26,792
  28,027
  29,319
  30,675
  32,097
  33,588
  35,156
  36,802
  38,533
  40,353
  42,266
  44,276
  46,390
  48,611
Total cash flow (excl. dividends), $m
  421
  10,572
  11,502
  12,200
  12,882
  13,552
  14,212
  14,866
  15,520
  16,176
  16,839
  17,438
  18,130
  18,843
  19,582
  20,349
  21,150
  21,988
  22,868
  23,792
  24,765
  25,790
  26,870
  28,010
  29,212
  30,480
  31,819
  33,231
  34,720
  36,290
  37,946
Retained Cash Flow (-), $m
  -111
  -1,931
  -2,061
  -2,319
  -2,586
  -2,864
  -3,152
  -3,450
  -3,759
  -4,079
  -4,410
  -4,676
  -5,031
  -5,399
  -5,781
  -6,177
  -6,588
  -7,015
  -7,459
  -7,920
  -8,401
  -8,901
  -9,421
  -9,964
  -10,529
  -11,119
  -11,735
  -12,378
  -13,049
  -13,750
  -14,482
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  8,641
  9,441
  9,881
  10,296
  10,688
  11,060
  11,416
  11,761
  12,097
  12,429
  12,762
  13,099
  13,444
  13,800
  14,172
  14,562
  14,973
  15,409
  15,872
  16,364
  16,889
  17,449
  18,046
  18,683
  19,361
  20,084
  20,853
  21,671
  22,541
  23,464
Discount rate, %
 
  12.60
  13.23
  13.89
  14.59
  15.32
  16.08
  16.89
  17.73
  18.62
  19.55
  20.52
  21.55
  22.63
  23.76
  24.95
  26.19
  27.50
  28.88
  30.32
  31.84
  33.43
  35.10
  36.86
  38.70
  40.64
  42.67
  44.80
  47.04
  49.39
  51.86
PV of cash for distribution, $m
 
  7,674
  7,364
  6,688
  5,972
  5,241
  4,520
  3,830
  3,187
  2,602
  2,085
  1,637
  1,259
  948
  698
  502
  352
  241
  160
  104
  65
  40
  23
  13
  7
  4
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  76.4
  59.4
  46.2
  36.0
  28.1
  22.0
  17.2
  13.5
  10.6
  8.4
  6.6
  5.2
  4.2
  3.3
  2.6
  2.1
  1.7
  1.3
  1.0
  0.8
  0.7
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1

Brookfield Property Partners L.P. is a diversified global real estate company. The Company owns, operates and develops a portfolio of office, retail, multifamily, industrial, hospitality, triple net lease, self-storage and student housing assets. Its partnership is Brookfield Asset Management Inc.'s public commercial property entity and the primary vehicle through which it invests in real estate on a global basis. It operates through four segments: Core Office, Core Retail, Opportunistic and Corporate. As of December 31, 2016, its Core Office segment consisted of interests in 142 office properties totaling 99 million square feet. As of December 31, 2016, its Core Retail segment consisted of interests in 127 regional malls and urban retail properties. As of December 31, 2016, its Opportunistic segment consisted of 107 office properties comprising approximately 29 million square feet of office space in the United States, United Kingdom, Brazil and Asia.

FINANCIAL RATIOS  of  Brookfield Property Partners (BPY)

Valuation Ratios
P/E Ratio 9.6
Price to Sales 1.2
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 8.5
Price to Free Cash Flow -0.9
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0.4%
Cap. Spend. - 3 Yr. Gr. Rate 20%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 376.9%
Total Debt to Equity 444.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 1.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 16.4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 63.6%
Gross Margin - 3 Yr. Avg. 63.2%
EBITDA Margin 70.3%
EBITDA Margin - 3 Yr. Avg. 112.4%
Operating Margin 8.1%
Oper. Margin - 3 Yr. Avg. 8.1%
Pre-Tax Margin 40%
Pre-Tax Margin - 3 Yr. Avg. 82.6%
Net Profit Margin 12.3%
Net Profit Margin - 3 Yr. Avg. 20.2%
Effective Tax Rate -26.8%
Eff/ Tax Rate - 3 Yr. Avg. -1.1%
Payout Ratio 0%

BPY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BPY stock intrinsic value calculation we used $5352 million for the last fiscal year's total revenue generated by Brookfield Property Partners. The default revenue input number comes from 2016 income statement of Brookfield Property Partners. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BPY stock valuation model: a) initial revenue growth rate of 14% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.6%, whose default value for BPY is calculated based on our internal credit rating of Brookfield Property Partners, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Brookfield Property Partners.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BPY stock the variable cost ratio is equal to 67.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1350 million in the base year in the intrinsic value calculation for BPY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.3% for Brookfield Property Partners.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Property Partners. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BPY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BPY are equal to 10.7%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Brookfield Property Partners operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BPY is equal to -9.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7542 million for Brookfield Property Partners - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 256.962 million for Brookfield Property Partners is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Brookfield Property Partners at the current share price and the inputted number of shares is $6.2 billion.

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Financial statements of BPY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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