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

Red Deer to get new plan to end homelessness as problem persists

Despite some successes there’s ‘a long way to go,’ says manager

Canada ranks 16th on World Economic Forum’s annual gender gap list

TORONTO — Canada has landed the 16th spot in the World Economic… Continue reading

Steel, aluminum tariffs impacting one-third of Canadian exporters: poll

OTTAWA — More than one-third of Canadian exporters say they have been… Continue reading

Canada has fifth biggest AI workforce, but still lacks diversity: study

TORONTO — Canada has the globe’s fifth largest artificial intelligence workforce, but… Continue reading

Air passenger rights: Six things about what the Liberals are offering in draft rules

OTTAWA — The Liberals will publish the draft text of their long-promised… Continue reading

Chabot scores overtime winner to lift Senators over Predators 4-3

OTTAWA — Thomas Chabot saw an opening and he took it. And… Continue reading

Canadian Marielle Thompson earns World Cup ski cross bronze in season opener

AROSA, Switzerland — Canada’s Marielle Thompson captured bronze at the opening World… Continue reading

Canada doesn’t make Oscars short list for best foreign language film

LOS ANGELES — Canada is no longer in the running for best… Continue reading

Warrant issued for arrest of ‘Schwimmer lookalike’ suspect

LONDON — A British judge has issued an arrest warrant for an… Continue reading

Moneywise: Canadian workers unhappy with pay, want pension plans

Many working Canadians are feeling underpaid and are so worried about their… Continue reading

Brazil police say faith healer has turned himself in

RIO DE JANEIRO — A celebrity faith healer accused of sexually abusing… Continue reading

B.C. hockey coach creates ‘gear library’ to remove cost barrier of sport

VANCOUVER — Nicola Froese says she has always loved playing sports, but… Continue reading

Canada’s Kim McRae finishes seventh at luge World Cup in Lake Placid, N.Y.

LAKE PLACID, N.Y. — Canada’s Kim McRae finished in seventh place at… Continue reading

Most Read