U.S. mall owner mulls Brookfield Property bid
$14.8B transaction would create one of world’s largest listed property companies
NEW YORK— Brookfield Property Partners LP bid about $14.8 billion (U.S) to acquire the stake it doesn’t already hold in U.S. mall owner GGP Inc. as the companies seek to repurpose struggling bricks-and-mortar shopping centres.
The firm offered $23 a share for the 66 per cent of GGP it doesn’t own, Brookfield said in a statement on Monday. That’s about 21 per cent more than Chicago-based GGP’s closing price on Nov. 6, the day before Bloomberg reported Brookfield had held discussions about taking the company private. GGP said in a separate statement that its board formed a special committee to review the unsolicited proposal.
GGP shares climbed above the offer price, gaining 8.3 per cent to $24.05 at market close in New York.
Brookfield Property Partners is the real estate unit of Toronto-based Brookfield Asset Management Inc. Brookfield Asset has been focusing on buying and revamping shopping centres to take advantage of the land they occupy in urban areas, CEO Bruce Flatt said on a conference call last week. GGP last month reached an agreement with AvalonBay Communities Inc. to build apartments at ashopping centre in Seattle and GGP CEO Sandeep Mathrani said the company “will look to explore simi- lar projects at other locations.”
Brookfield Property plans to “leverage our expertise to grow, transform or reposition GGP’s shopping centres, creating long-term value in a way that would not otherwise be possible,” CEO Brian Kingston said in his statement. The transaction would create one of the largest listed property companies in the world, with stakes in almost $100 billion of real estate globally and annual net operating income of about $5 billion, Brookfield said.
In the third quarter, Brookfield exercised all of its outstanding warrants in GGP, bringing its ownership stake to 34 per cent from 29 per cent, the company said in a statement earlier this month. The 68 million shares were purchased for $462 million.
Brookfield Asset, which invests across real estate, infrastructure, renewable energy and private equity, said in November that assets under management increased to more than $265 billion. The company took a stake in GGP as part of an agreement to take the company out of bankruptcy in 2010.
Shares of mall companies have been hit hard as the rise of e-commerce squeezes traditional retailers. Store closures are accelerating, pressuring landlords to fill empty space and reinvent shopping centres.
Brookfield Property presented its proposal to GGP’s board on Friday. Goldman Sachs Group Inc. is serving as financial adviser to GGP’s special committee and Citigroup Inc. is advising the company.