Brookfield Reaches Deal To Buy GGP, Form New REIT

Brookfield Property Partners is acquiring mall owner GGP for $9.25B in cash in a merger that will form one of the U.S.' largest publicly traded owners of retail properties.

Under the deal, announced Monday after the markets closed, GGP's shareholders can choose to get $23.50 in cash or one unit of Brookfield stock for each GGP common share.

Brookfield is creating a new REIT as part of the sale, which will be called BPY U.S. REIT, and shareholders will be able to elect to receive shares in that new entity, worth 40% more than GGP's current dividend. GGP's select committee, which was assembled to review the merger, unanimously recommended the mall REIT's shareholders approve the sale.

Earlier this month, Brookfield made an updated offer to GGP, after its November cash-and-stock acquisition offer for $23 per share was rejected. The new offer, according to Brookfield, increases the aggregate cash consideration from $7.4B to $9.25B.

Brookfield already owned 34% of GGP's shares, and controlled several seats on its board of directors.

“This is a compelling transaction that enables GGP shareholders to receive premium value for their shares and gives them the ability to participate in the long-term upside of their investment," Brookfield Property Partners CEO Brian Kingston said in a statement. "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.”

The tax reform law slowed down negotiations, according to Reuters. Reports of Brookfield’s interest in GGP first surfaced in 2016.

The Chicago-based REIT has approximately 125 retail centers across the country, and was saved from bankruptcy in 2010 by Brookfield and other investors. During its 2017 fourth-quarter earnings call, GGP CEO Sandeep Mathrani said the company leased 9.7M SF in 2017.

Brookfield was rumored to be in talks to buy Forest City Realty Trust, though the company did not confirm it was trying to by the Cleveland-based REIT. But last week, Forest City announced it would not be proceeding with a sale.