Brookfield Property Partners makes offer for stake in GGP it doesn’t already own

TORONTO — Brookfield Property Partners LP is offering $18.8-billion in stock and cash to buy out the shares of U.S. shopping mall owner GGP Inc. that it does not already own, doubling down on the future of brick-and-mortar retail as many merchants come under pressure from e-commerce.

The company (TSX:BPY.UN), which is a publicly-traded real estate company and subsidiary of Toronto-based Brookfield Asset Management, already holds a 34 per cent stake in GGP (NYSE: GGP).

GGP said it has formed a special committee of its non-executive, independent directors to review and consider the offer.

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

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

Under the bid, 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.

Shares of Brookfield Property Partners were down 2.57 per cent in early morning trading on Monday to $29.25. Shares of GGP in New York, however, were up more than 6 per cent to US$23.58.

However, GGP shares on the New York Stock Exchange are down nearly 6 per cent year-to-date as brick-and-mortar retailers increasingly come under pressure from competition from e-commerce, such as Amazon.

Department store retailer Sears Canada and children’s retailer Toys ‘R’ Us Canada are the latest to struggle in the changing retail landscape, with both seeking protection from creditors this year. Sears Canada is currently liquidating its remaining stores as it prepares to wind down operations after 65 years.

Still, Kingston sounded bullish on American shopping malls on its third-quarter earnings call with analysts earlier this month. He said that its U.S. mall business — which consists of 126 regional malls containing roughly 11.4 million square metres, which is enough to fill more than 7,200 standard hockey rinks — in the third quarter had positive financial results and occupancy rose 80 basis points to 95.4 per cent.

“These positive results demonstrate that 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, according to a transcript. “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.”

The offer comes after Brookfield in 2010 invested $2.5 billion for a 27 per cent stake in the Chicago-based mall owner as part of a deal for GGP to emerge from bankruptcy. As part of the restructuring agreement, Brookfield agreed to not increase its ownership beyond 45 per cent. Brookfield has since moved to increase its stake within those boundaries, and in November 2013 Brookfield Property Partners invested another US$1.4 billion to increase its stake.

Just Posted

Pioneer life at Red Deer museum

Sunnybrook Farm Museum teaches students

Red Deer College student receives scholarship

Funding from Canadian Hearing Society

Central Alberta school districts are graded on their no-smoking policies

ASH wants them to tighten restrictions on tobacco, vaping, as well as cannabis

Free film shown in Red Deer Thursday to celebrate Recovery Day

A free film will be shown in Red Deer on Thursday about… Continue reading

Calder School takes shape in Red Deer

Sunnybrook Farm Museum’s latest addition

Hushing my buzz: Alberta finance minister says cannabis warehouse will be secret

EDMONTON — Alberta is starting to stockpile marijuana but isn’t saying where… Continue reading

Relatives mourn death of Calgary-area woman killed by pet dog protecting child

CALGARY — Relatives of a Calgary-area woman killed by her own pet… Continue reading

Florence death toll climbs to 37; Trump visits stricken area

WILMINGTON, N.C. — The death toll from Hurricane Florence climbed to at… Continue reading

Toronto election proceeding with 25 wards after court sides with province

TORONTO — Ontario’s top court has sided with the provincial government in… Continue reading

Scheer welcomes former Liberal MP Alleslev to Conservative caucus

OTTAWA — Andrew Scheer is trying to fire up his Conservative troops… Continue reading

Trudeau says Canada wants to see ‘movement’ before signing revised NAFTA deal

WASHINGTON — Prime Minister Justin Trudeau signalled today that Canada wants more… Continue reading

Uber driver suing Bucs’ QB Winston over groping incident

PHOENIX — A female Uber driver in Arizona is suing Tampa Bay… Continue reading

Thousands of fans request grand jury probe of Prince’s death

MINNEAPOLIS — Thousands of Prince fans are asking federal authorities to open… Continue reading

Most Read