Brookfield Property Partners proposes to take GGP private for US $14.8B

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By Ted Liu

Brookfield Property Partners L.P. (NYSE: BPY; TSX: BPY.UN) has made a non-binding proposal to acquire all the outstanding shares of common stock of GGP Inc. (NYSE: GGP), other than those shares currently held by BPY and its affiliates (representing approximately 34% of the outstanding shares) for US $14.8 billion.

Each common share of GGP will be acquired for consideration of US $23.00. Each GGP shareholder can elect to receive consideration per GGP common share of either $23.00 in cash or 0.9656 of a limited partnership unit of BPY, subject in each case to pro-ration based on a maximum cash consideration of approximately US $7.4 billion (50% of the aggregate offer) and a maximum of approximately 309 million BPY units valued at approximately US $7.4 billion (50% of the aggregate offer).

The combined company will be owned approximately 30% by existing GGP shareholders. It will own one of the highest quality and most diverse real estate portfolios globally, with a strong balance sheet and financial profile.

The proposal represents a premium of 21% to the unaffected closing share price of the Company’s common stock of US $19.01 on November 6, 2017.

GGP is an S&P 500 retail real estate company focused exclusively on owning, managing, leasing, and redeveloping high-quality retail properties throughout the United States.

The transaction will create, in BPY, one of the largest listed property companies in the world, with an ownership interest in almost US $100 billion of premier real estate assets globally and annual net operating income of approximately US $5 billion.

Brian Kingston, Chief Executive Officer of Brookfield Property Group, said, “Brookfield’s access to large-scale capital and deep operating expertise across multiple real estate sectors combined with GGP’s high-quality retail asset base will allow us to maximize the value of these irreplaceable assets. We are excited about the opportunity to leverage our expertise to grow, transform or reposition GGP’s shopping centers, creating long-term value in a way that would not otherwise be possible.”
He continued, “This transaction will provide GGP shareholders the option to immediately realize value for their shares at a 21% premium in cash and the opportunity to continue to participate in the growth of a leading, globally diversified real estate company that will be able to grow faster and create more value than either could on a stand-alone basis.”

BPY presented its proposal to the Board of Directors of GGP on November 11, 2017. The transaction is subject to the negotiation and execution of definitive transaction documents and customary approvals, including, approval of a majority of the Company’s stockholders not affiliated with BPY.

GGP Board has formed a Special Committee of its non-executive, independent directors and advised stockholders do not need to take any action at this time.

Goldman Sachs & Co. LLC. is serving as financial advisor and Simpson Thacher & Bartlett LLP is serving as legal counsel to the Special Committee. Citigroup Global Markets Inc. is serving as financial advisor and Sullivan & Cromwell LLP is serving as legal counsel to GGP.

photo credit: GGP