Brookfield Property makes big retail play

Looks to acquire mall owner GGP Inc., offering $18.8 billion

Brookfield Property Partners LP offered $18.8 billion in stock and cash to fully acquire U.S. shopping mall owner GGP Inc. in a deal announced Monday, doubling down on the future of bricks-andmortar retail even as many merchants face increasing pressure from e-commerce.

The Toronto-based company, a publicly traded real estate subsidiary of Brookfield Asset Management, already holds a 34 per cent stake in GGP.

The Chicago-based mall owner, which has 126 retail properties in 40 U.S. states, said it has formed a special committee of its non-executive, independent directors to review and consider the offer.

The acquisition is an opportunity to leverage Brookfield’s expertise to grow, transform or reposition GGP’s shopping centres, “creating long-term value in a way that would not otherwise be possible,” said Brian Kingston, chief executive officer of Brookfield Property Group.

“Brookfield’s access to largescale capital and deep operating expertise across multiple real estate sectors combined with GGP’s highquality retail asset base will allow us to maximize the value of these irreplaceable assets,” he said in a statement on Monday.

Brookfield is offering $29, or US$23, in cash or 0.9656 of a Brookfield Property Partners unit in exchange for each GGP share. The amount of cash offered is capped at $9.4 billion, while the number of shares offered is limited to 309 million, worth roughly $9.4 billion.

Brookfield Property Partners said the offer is a premium of 21 per cent to where GGP shares were trading before reports of a possible offer last week.

GGP shares are down nearly five per cent year-to-date as its retail tenants increasingly come under pressure from the likes of Amazon.

But Brookfield’s Kingston sounded bullish on shopping malls on its third-quarter earnings call. He said that its U.S. mall business — which consists of 126 regional malls containing roughly 11.4 million square metres — saw positive financial results, with occupancy rising 80 basis points to 95.4 per cent.

“Well-located, high-quality, retail real estate in the United States continues to perform well, despite negative perception in the public markets,” he told analysts on Nov. 2.

“While many retailers continue to face significant challenges in growing their businesses, those retailers that are focused on the intersection between bricks and mortar retail and online sales channels continue to expand and grow.”