Brookfield Property Partners makes $14.8bn bid for GGP

January 2018 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

January 2018 Issue

In a deal that would create one of the world’s largest listed property companies, major commercial real estate owner Brookfield Property Partners L.P. has made a $14.8bn non-binding bid for real estate investment trust, GGP Inc.

Brookfield’s proposal is for the firm to acquire all of the outstanding shares of common stock of GGP other than those shares currently held by Brookfield and its affiliates, which represent approximately 34 percent of the outstanding shares of GGP’s common stock.

Furthermore, each GGP stockholder would be entitled to elect to receive consideration per GGP common share of either $23.00 in cash or 0.9656 of a limited partnership unit of Brookfield – subject in each case to pro-ration based on a maximum cash component of 50 percent of the aggregate offer and a maximum stock component of 50 percent of the aggregate offer.

Once the transaction is complete, 30 percent of the combined company will be owned by existing GGP shareholders. Moreover, Brookfield will own one of the highest quality and most diverse real estate portfolios globally, with an ownership interest in almost $100bn of assets and annual net operating income of approximately $5bn. The transaction is expected to be immediately accretive to Brookfield’s funds from operations (FFO) per unit and will provide for an enhanced dividend to GGP’s shareholders who elect to receive Brookfield units.

The flagship listed real estate company of Brookfield Asset Management, a leading global alternative asset manager with over $265bn in assets under management, Brookfield Property Partners is one of the world’s largest commercial real estate companies, with approximately $68bn in total assets. The firm is a leading owner, operator and investor in commercial real estate, with a diversified portfolio of premier office and retail assets, as well as interests in multifamily, triple net lease, industrial, hospitality, self-storage, student housing and manufactured housing assets.

“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 maximise the value of these irreplaceable assets,” said Brian Kingston, chief executive of Brookfield Property Group. “We are excited about the opportunity 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.”

GGP is an S&P 500 company focused exclusively on owning, managing, leasing and redeveloping high-quality retail properties throughout the US. Headquartered in Chicago, Illinois, GGP is publicly traded on the New York Stock Exchange.

The GGP board has formed a special committee of its non-executive, independent directors which, in consultation with its financial and legal advisers, will carefully review and consider Brookfield’s proposal and pursue the course of action that it believes is in the best interests of GGP’s stockholders. Serving as financial adviser to the special committee is Goldman Sachs & Co. LLC. Simpson Thacher & Bartlett LLP is serving as legal counsel. For GGP, Citigroup Global Markets Inc. is serving as financial adviser and Sullivan & Cromwell LLP is serving as legal counsel.

The proposed Brookfield/GGP transaction is subject to the negotiation and execution of definitive transaction documents and customary approvals, as well as approval from a majority of the GGP’s stockholders not affiliated with Brookfield Property Partners.

Mr Kingston concluded: “This transaction will provide GGP shareholders the option to immediately realise value for their shares at a 21 percent premium in cash and the opportunity to continue to participate in the growth of a leading, globally diversified real estate company that will be able to grow faster and create more value than either could on a stand-alone basis.”

Fraser Tennant