Global commercial real estate firm Brookfield Property Partners announced an agreement to acquire the remaining 66 percent of Chicago-based General Growth Properties (GGP), the nation’s second biggest mall owner, for $15.3 billion. The deal includes a $9.25 billion cash offer and approximately 254 million Brookfield Property shares, valued at $23.50 per share.
Brookfield Property was previously GGP’s largest shareholder with control of 34 percent of the company. They proposed to buy out the remainder of the company in December for approximaely $14.8 billion, an offer that GGP rejected at the time.
“After careful consideration, assisted by our independent advisors, the special committee determined that Brookfield’s improved proposal, which includes an increase in the cash portion of the consideration and the ability to receive shares in a newly listed REIT entity, provides GGP shareholders with certainty of value, as well as upside potential through ownership in a globally diversified real estate company,” said Daniel Hurwitz, lead director and chairman of the special committee at GGP.
The struggling retail sector has led investors with shopping center holdings to diversify as once reliable anchor tenants contract or enter bancruptcy. However, GGP’s portfolio includes many top tier malls such as Chicago’s Water Tower Place, a class of retail which outperforms other shopping malls in a downturning environment.
Once the deal is complete, GGP shareholders will own approximately 26 percent of the merged entity.The combined company will be one of the world’s largest real estate enterprises with approximately $90 billion in assets and an estimated annual net operating income of $4 billion.
“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,” said Brian Kingston, CEO of Brookfield Property Partners.
