If it bleeds, it leads. That phrase has been thrown around by journalists for over a century, and it seems to be more true now than ever in the era of digital news. People like to read about misfortunes just like they slow down for car wrecks. And media companies like to use this tenancy for their own good. Yesterday, an article came out in Bloomberg about how Brookfield Real Estate Trust had experienced its first yearly loss. It was picked up and recirculated, and Blackstone was added to the list of casualties.

Publications have been waiting for this blood for a while; after all, there are only so many times they (or Kevin O'Leary) can predict that commercial real estate will crash. Now that Brookfield is finally showing a loss (6.7 percent) for the first time in its history, there is finally evidence to support the apocalyptic predictions, right? Well, if you take the time to understand the complexity of the company, you will find out how good that number might actually be.

It can be difficult to talk about Brookfield because it is a big organization with many parts. A few years back, the company even restructured to address this problem. Even after that restructuring, Brookfield still consists of a few different entities. There is Brookfield Asset Management, the parent company of the other divisions including Brookfield Property Partners, Brookfield Infrastructure, and Brookfield Investment Management, just to name a few.

Brookfield REIT is its own fund that is 75 percent owned by Brookfield Asset Management. The assets owned by the REIT are quite different than many of the other divisions. Most notably, only five percent of the allocation is office. The largest part of the portfolio is actually rental housing, which comprises 63 percent.

The property that Brookfield REIT holds on the books seems to be rather stable and well-positioned for the current lending environment. Their average loan-to-value is 46 percent, and 80 percent of the debt is either fixed rate or has been hedged.

The REIT is not only involved in real estate, for the last year or so, Brookfield REIT has been buying up "high quality, floating rate debt.” Thanks to this and a merger with debt brokerage Oaktree Credit, Brookfield REIT is now almost one-third of credit investments by value.

The losses that Brookfield REIT suffered are mostly from a write-down of building value, one that the company thinks may be the last. They are already looking to purchase distressed assets. "Looking at the market today, we believe the time may be coming to shift from defense back to offense, and our credit portfolio provides the Brookfield REIT with the dry powder to do so," the shareholder letter said. How much dry power do they have? According to their financial documents, it is somewhere around $600 million. They have already put in a bid to buy a portfolio of Bay Area mid-market multifamily buildings from Veritas Investments.

Despite the negative headlines, Brookfield REIT appears to have handled the difficult situation well and is prepared for any future challenges. It is important to remember that this analysis should only be applied to the REIT, which is just one piece of the company's web of investments. Just last month, Brookfield Property Partners had its credit rating cut to junk territory because of the future outlook of its maturing debt obligations. When it comes to companies as big as Brookfield, things are more complicated than they seem, or at least than can easily be written in a few hundred words.

✂️ Cut away: Public real estate stocks have tumbled as many are rethinking their predictions about an interest rate cut as early as March.

🔻 Propped up: Home prices in China continue to drop, recording their steepest declines in nine years, despite the government’s efforts to support the struggling property sector.