PrefBlog

Brookfield Corporation has announced:

the reset dividend rate on its Cumulative Class A Preference Shares, Series 24 (the “Series 24 Shares”) (TSX: BN.PR.R) for the five years commencing July 1, 2026 and ending June 30, 2031.

If declared, the fixed quarterly dividends on the Series 24 Shares during the five years commencing July 1, 2026 will be paid at an annual rate of 5.432% ($0.3395 per share per quarter).

Holders of Series 24 Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on June 15, 2026, to convert all or part of their Series 24 Shares, on a one-for-one basis, into Cumulative Class A Preference Shares, Series 25 (the “Series 25 Shares”), effective June 30, 2026. The quarterly floating rate dividends on the Series 25 Shares will be paid at an annual rate, calculated for each quarter, of 2.30% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the July 1, 2026 to September 30, 2026 dividend period for the Series 25 Shares will be 1.16525% (4.623% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.2913125 per share, payable on September 30, 2026.

Holders of Series 24 Shares are not required to elect to convert all or any part of their Series 24 Shares into Series 25 Shares.

As provided in the share conditions of the Series 24 Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series 24 Shares outstanding after June 30, 2026, all remaining Series 24 Shares will be automatically converted into Series 25 Shares on a one-for-one basis effective June 30, 2026; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series 25 Shares outstanding after June 30, 2026, no Series 24 Shares will be permitted to be converted into Series 25 Shares. There are currently 10,808,027 Series 24 Shares outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 25 Shares effective upon conversion. Listing of the Series 25 Shares is subject to Brookfield fulfilling all the listing requirements of the TSX.

BN.PR.R was issued as BAM.PR.R, a FixedReset 5.40%+230 that commenced trading 2010-1-14 after being announced 2010-1-5. It reset to 3.014% in 2016; I recommended against conversion but there was a 14% conversion to the FloatingReset BAM.PR.S anyway. The issue reset to 3.237% in 2021, at which time the FloatingResets were forcibly converted back to the FixedReset. The ticker changed in December, 2022.

Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners L.P. has announced:

the reset dividend rate on its Class AAA Preference Shares, Series N (“Series N Shares”) (TSX: BPO.PR.N).

Series N Shares

If declared, the fixed quarterly dividends on the Series N Shares for the five years commencing July 1, 2026 and ending June 30, 2031 will be paid at an annual rate of 6.2060% ($0.387875 per share per quarter).

Holders of Series N Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on June 15, 2026, to convert all or part of their Series N Shares, on a one-for-one basis, into Class AAA Preference Shares, Series O (the “Series O Shares”), effective June 30, 2026.

The quarterly floating rate dividends on the Series O Shares have an annual rate, calculated for each quarter, of 3.07% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate for the July 1, 2026 to September 30, 2026 dividend period for the Series O Shares will be 1.358580% (5.39% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.339645 per share, payable on September 30, 2026.

Holders of Series N Shares are not required to elect to convert all or any part of their Series N Shares into Series O Shares.

As provided in the share conditions of the Series N Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series N Shares outstanding after June 30, 2026, all remaining Series N Shares will be automatically converted into Series O Shares on a one-for-one basis effective June 30, 2026; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series O Shares outstanding after June 30, 2026, no Series N Shares will be permitted to be converted into Series O Shares. There are currently 10,875,438 Series N Shares outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series O Shares effective upon conversion. Listing of the Series O Shares is subject to Brookfield fulfilling all the listing requirements of the TSX and, upon approval, the Series O Shares will be listed on the TSX under the trading symbol “BPO.PR.O”.

BPO.PR.N was issued a FixedReset 6.15%+307, that commenced trading 2010-1-20 after being announced 2010-1-11. The issue attracted some unfavourable comment on issue due to the relatively long call lock-out period – which shows complete misunderstanding of the investment impact of an issuer call option, but we’ll ignore that. The issue reset to 3.782% in 2016; I recommended against conversion and there was no conversion.The issue reset to 4.007% in 2021, with no conversion. It is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Brookfield Office Properties Inc. has announced (on 2026-05-19):

that it intends to redeem all 7,982,204 of its outstanding Class AAA Preference Shares, Series CC (TSX: BPO.PR.C), all of which are held by CDS & Co., as nominee of CDS Clearing and Depositary Services Inc., for cash on June 30, 2026. The redemption price for each such share will be C$25.00. Separately from the redemption price, the final quarterly cash dividend of C$0.382313 per share, will be paid in the usual manner on June 30, 2026, to holders of record on June 15, 2026.

Notice of Redemption has been sent to CDS & Co. Payment of the redemption price will be made to all beneficial holders of the Series CC Shares on or after June 30, 2026 through the facilities of CDS & Co.

BPO.PR.C was issued as a FixedReset, 6.00%+518M600, that commenced trading 2016-4-27 after being announced 2016-4-18. It reset to 6.12% in 2021 with no conversion. The issue has been tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Thanks to the Assiduous Reader who brought this to my attention!

DBRS has announced that it:

upgraded the credit rating on the Preferred Shares issued by Dividend 15 Split Corp. II (the Company) to Pfd-3 from Pfd-3 (low). The rating upgrade reflects the significant improvement in downside protection for the Preferred Shares over the past year.

The Company invests in an actively managed portfolio of common shares (the Portfolio) which currently primarily includes securities of the following publicly traded Canadian companies, each of whose securities will generally represent no less than 4% and no more than 8% of the net asset value of the Company: Bank of Montreal, Royal Bank of Canada, Bank of Nova Scotia, Sun Life Financial Inc., BCE Inc, TC Energy Corp., Canadian Imperial Bank of Commerce, TELUS Corporation, Thomson Reuters Corporation, Enbridge Inc, The Toronto-Dominion Bank, Manulife Financial, TransAlta Corporation, National Bank of Canada. The Company may also invest up to 15% of the net asset value in equity securities of issuers other than the companies listed above. In order to supplement the dividends received on the portfolio and to reduce risk, the Company will from time to time write covered call options in respect of some or all of the common shares in the Portfolio. The Portfolio is actively managed by Quadravest Capital Management.

The Company’s termination date is December 1, 2029. At termination, the holders of the Preferred Shares will be entitled to the value of the Company up to the face amount of the Preferred Shares in priority to the holders of the Class A Shares. Holders of the Class A Shares will receive the remaining value of the Company. The Company’s board of directors can extend the termination date for additional successive terms of five years each, provided that shareholders are given an optional special retraction right in connection with such extension.

Dividends received from the Portfolio are used to pay fixed cumulative monthly cash distributions. Holders of the Preferred Shares are entitled to receive fixed cumulative preferential monthly cash dividends in the amount of $0.05833 per Preferred Share, yielding 7.00% per annum on the original issue price of $10.00. Holders of the Class A Shares currently receive regular monthly cash distributions, targeted to be $0.10 per Class A Share. Distributions to the Class A Shares are made only if the distributions on the Preferred Shares are not in arrears and the NAV per unit (which consists of one Class A and one Preferred Share) is in excess of $15.00 Distributions for the one-year period ended April 2026 totaled $1.20 per Class A Share.

On June 20, 2025, the Company renewed its at-market-program that allows the Company to issue shares of the Company to the public from time to time at the Company’s discretion, effective until July 19, 2027, unless terminated prior to such date by the Company. The maximum gross proceeds from the issuance of the shares will be $350,000,000.

As of May 15, 2026, the downside protection available to holders of the Preferred Shares improved to 47.9% from 35.5% as of April 30, 2025, and the asset coverage was at 1.9 times (x) whereas the projected dividend coverage declined to 0.6x. The dividend coverage below 1.0x indicates that the current dividend income earned by the Company is not enough to fully cover the Company’s operating expenses and targeted distributions on the Preferred Shares. To further supplement the Portfolio income, the Company may engage in covered call and put options writing on all or a portion of the shares held in the Portfolio and/ or rely on realized capital gains. Without giving consideration to capital appreciation potential or any source of income other than the dividends earned by the Portfolio, the Preferred Share distributions together with the current distributions on the Class A Shares will create a projected grind on the NAV of the Portfolio of approximately 5.8% per year over the next 5 years.

Considering the increase in the amount of downside protection available to holders of the Preferred Shares, dividend coverage below 1.0x, the Portfolio diversification and projected grind on the Portfolio, Morningstar DBRS upgraded the credit rating on the Preferred Shares to Pfd-3 from Pfd-3 (low).

The main constraints to the credit rating are as follows:

(1) Volatility of price and changes in the dividend policies of the underlying issuers may result in significant reductions in the Preferred Shares’ dividend coverage or downside protection from time to time.

(2) Dividends and interest received on the Portfolio are currently unable to fully cover distributions on the Preferred Shares.

(3) The Company relies on the Portfolio manager to generate additional income, through option writing, to meet distributions and other trust expenses without having to liquidate the portfolio’s securities.

(4) Stated monthly distributions on the Class A Shares will likely create a grind on the portfolio. This risk is mitigated by an asset coverage test of 1.5x that ensures sufficient levels of downside protection to the holders of the Preferred Shares.