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Mall Giant Brookfield Property Could Go Private in a $5.9 Billion Deal

Shares for Brookfield Property Partners LP surged double digits in Monday morning trading following an announcement that it could go private in a deal valued at about $5.9 billion.

Today, parent Brookfield Asset Management Inc. and a group of investors revealed that they offered to acquire the stake in Brookfield Property Partners that they don’t already own. Brookfield Asset Management would buy the outstanding units for $16.50 each — about a 14% premium to Thursday’s closing price. (The stock market was closed on Friday due to the New Year holiday.)

Brookfield Asset Management currently owns roughly 65% of Brookfield Property Partners, which had a market value of $13.8 billion at Thursday’s close. Existing shareholders would have three options: In exchange for their shares, they could receive the aforementioned $16.50 in cash, 40 cents of Brookfield Asset Management’s Class A shares or 66 cents of Brookfield Property Partners’ preferred units.

As of 10:30 a.m. ET, BPY’s stock was up more than 16.5% to $16.86.

“The offer presents an excellent opportunity for BPY unitholders to either monetize their units in cash at a premium to recent trading prices; continue to invest with us in the upside of the portfolio via Brookfield shares; or select BPY preferred units designed for income-oriented investors who would like to maintain similar dividend income which they receive from BPY today in a preferred instrument, based on what is best for them,” Brookfield Asset Management CFO Nick Goodman said in a statement.

He added, “The privatization will allow us to have greater flexibility in operating the portfolio and realizing the intrinsic value of BPY’s high-quality assets.”

Brookfield Asset Management has asked the board of directors of the general partner of BPY to begin a process to review the proposal and appoint a special committee of independent directors to commission an independent valuation of the BPY units. Once that valuation is available, Brookfield Asset Management plans to enter into a definitive agreement with BPY related to the proposed transaction.

Brookfield Property Partners has publicly traded for nearly eight years and has approximately $88 billion in assets. The commercial real estate firm operates offices and industrial properties around the world, as well as retail developments in the United States, Europe, Brazil and Asia. Back in September, it laid off 20% of its workforce, including corporate employees as well as leasing agents, as shopping centers struggle to attract visitors amid the COVID-19 health crisis.

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