Brookfield taking pandemic-hit real estate arm private

Firm will pay $6.5B for remaining shares of Brookfield Property Partners, whose retail portfolio has been hammered

National /
Apr.April 01, 2021 11:40 AM
Brookfield Real Estate CEO Brian Kingston and Brookfield Asset Management Bruce Flatt (Brookfield)

Brookfield Property Partners’ Brian Kingston and Brookfield Asset Management’s Bruce Flatt (Brookfield)

Brookfield Asset Management reached an agreement Thursday to take its Covid-dinged real estate arm private by acquiring all of Brookfield Property Partners’ outstanding shares in a deal worth $6.5 billion.

The Toronto-based asset manager already owns over 60 percent of Brookfield Property Partners shares, but in order to take the company private it had to buy out the remaining shareholders. The move takes Brookfield’s real estate wing off the public markets and away from scrutiny of analysts, investors and short sellers who have questioned its asset valuations.

Manhattan West in New York (SOM)

Manhattan West in New York (SOM)

Brookfield Property Partners owns some of the glitziest high-rise office towers in New York City, London and Los Angeles. As of October, it controlled 27 million square feet of office space in New York alone, including Manhattan West.

Rent collections at its offices have been stable, but its retail component has been hammered by the pandemic. The company controls one of the largest mall portfolios in the U.S. It has turned over some of these malls to lenders and said it is negotiating with special servicers on at least 20 of them in its fourth quarter earnings call with analysts.

Brookfield Property Partners, which reported $2 billion in losses in 2020, was also highly leveraged. Some analysts and investors noted the privatization plan was necessary in order to prevent the company from cutting its lucrative dividend, which was a key attraction for investors buying the stock.

The deal still falls significantly below what Brookfield Property Partners values its own shares. The company has said the fair value of its stock was around $27 per share.

Brookfield Asset Managements will pay $18.17 a share for Brookfield Property Partners’ outstanding shares, above the offer it announced in January, which would have marked the deal at $17.50 a share.

Lazard Frères, acting as an independent valuator and financial adviser, valued the fair market value of Brookfield Property Partners shares at between $14 and $18.50 a share.

Brookfield Property Partners’ independent directors unanimously approved the transaction. Shareholders of the real estate arm also have the option of receiving a portion of shares in Brookfield Asset Management instead of taking the cash offer.

Brookfield Asset Management CFO Nick Goodman said the company believes the deal is “appealing to BPY unit holders in many aspects and allows for greater optionality in how we manage our portfolio of high-quality real estate assets.”





    Related Articles

    arrow_forward_ios
    Manhattan condo signings jump 65% in November, led by priciest homes
    Manhattan condo signings jump 65% in November, led by priciest homes
    Manhattan condo signings jump 65% in November, led by priciest homes
    Brookfield picks up Clifton industrial complex
    Brookfield picks up Clifton industrial complex
    Brookfield picks up Clifton industrial complex
     Samanea New York at 1504 Old Country Road in Westbury (Facebook, Google Maps)
    Long Island mall vacancy rates range from 35% to 5%
    Long Island mall vacancy rates range from 35% to 5%
    Convention center planned near American Dream mall
    Convention center planned near American Dream mall
    Convention center planned near American Dream mall
    Here’s what tenants pay (and make) at the Westchester mall in White Plains
    Here’s what tenants pay (and make) at the Westchester mall in White Plains
    Here’s what tenants pay (and make) at the Westchester mall in White Plains
    Connecticut Post Mall (Centennial, Getty)
    Developers amend plan to build apartments at dying Milford mall
    Developers amend plan to build apartments at dying Milford mall
    Gov. Phil Murphy and Freehold Raceway Mall (Getty, Google Maps, iStock)
    “Knucklehead” anti-mask protest planned at Freehold mall
    “Knucklehead” anti-mask protest planned at Freehold mall
    Crystal Mall in Waterford, Connecticut (Crystal Mall via Facebook, Getty)
    Simon’s Connecticut mall valuation slashed by 88%
    Simon’s Connecticut mall valuation slashed by 88%
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...