Brookfield reaches massive deal to buy remainder of GGP

Fund manager to create new REIT for merger

TRD New York /
March 26, 2018 06:35 PM

From left: Ric Clark, Sandeep Mathrani and 685 Fifth Avenue (Credit: Getty Images and Thor Equities)

One of the biggest real estate mergers in years is nearing the finish line. Brookfield Property Partners reached an agreement to buy General Growth Properties after increasing its bid, the company announced Monday.

Brookfield will pay up to $9.25 billion cash — at $23.50 per share — and the remainder in shares, according to the statement. When the fund manager first bid for the retail real estate investment trust in November it offered up to $7.4 billion in cash at $23 per share.

GGP stock traded at $21.20 as of market close Monday, down from a July 2016 peak of $31.95.

As part of the deal, Brookfield is creating a new REIT, dubbed BPY U.S. REIT. GGP shareholders who don’t get cash for their shares can exchange them for shares in the new REIT, which can in turn be exchanged for units in Brookfield Property Partners.

“We are pleased to have reached an agreement and are excited about combining Brookfield’s access to large-scale capital and deep operating expertise across multiple real estate sectors with GGP’s portfolio of irreplaceable retail assets,” Brookfield Property Partners CEO Brian Kingston said in a statement.

Brookfield reportedly mulled a GGP acquisition as early as January 2016. As of December 2017, Brookfield already owned 34 percent of GGP’s shares. Its first buyout offer was rejected.

Last year, GGP increased its stakes in three Manhattan properties it owns with Thor Equities.

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