Commercial real estate company Brookfield Property Partners LP said on Monday it would acquire the 66 per cent of GGP Inc that it does not already own in a cash-and-stock deal that values GGP, the second-largest U.S. mall owner and operator at about US$15.3 billion.<\/p>\n
The deal comes as many malls struggle to retain tenants amid the brick-and-mortar retail sector’s downturn. The acquisition will strengthen Brookfield Property’s negotiating power with retailers and allow it to repurpose some GGP properties.<\/p>\n
“Having Brookfield’s expertise in offices, hotels and multi-family residential properties will allow the combined company to draw more value from the GGP mall assets,” Brookfield Property Chief Executive Brian Kingston told Reuters in an interview.<\/p>\n
The agreement comes four months after a special board committee of GGP rejected a US$14.8 billion cash-and-stock offer from Brookfield Property as inadequate.<\/p>\n
Brookfield Property, which is also a major owner of U.S. office properties, is currently GGP’s largest shareholder with a 34 per cent stake.<\/p>\n
Under Brookfield Property’s latest offer, which was first reported by Reuters earlier this month, GGP shareholders can elect to receive US$23.50 in cash per share, or either one Brookfield unit or one newly created share that trades as a real estate investment trust (REIT). GGP shares ended trading on Monday at US$21.21.<\/p>\n
The complex deal structure is the result of a compromise between Brookfield Property, which wanted to continue to trade as a publicly listed partnership, and GGP’s special committee, which wanted GGP shareholders to continue to own a REIT security, if they so choose.<\/p>\n
The cash consideration in the deal was increased by US$1.85 billion to US$9.25 billion. Instead of a 50\/50 split under Brookfield Property’s previous offer, cash now represents 61 per cent of the total deal.<\/p>\n
With about 127 “Class A” high-end mall properties, mostly in the United States, GGP’s tenants include carmaker Tesla Inc , jeweller Tiffany & Co and retailer Macy’s Inc .<\/p>\n
It is not the first time Brookfield Property’s attempt to take over a REIT in which it already owns a big stake was rejected, only for it to subsequently succeed.<\/p>\n
In 2016, Rouse Properties Inc, another U.S. mall owner, rejected an offer by Brookfield Property, its largest shareholder. It eventually agreed to a sweetened US$2.8 billion offer.<\/p>\n
Goldman Sachs Group Inc served as financial adviser and Simpson Thacher & Bartlett LLP served as legal counsel to GGP’s special committee. Citigroup Inc served as financial adviser and Sullivan & Cromwell LLP served as legal counsel to GGP. Weil, Gotshal & Manges LLP, Goodwin Procter LLP and Torys LLP served as legal counsel to Brookfield Property.<\/p>\n
\u00a9 Thomson Reuters 2108<\/p>\n","protected":false},"excerpt":{"rendered":"
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