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Brookfield Property Makes $14.8 Billion Offer to Acquire Remainder of GGP

Chicago’s Water Tower Place shopping center, seen here in 2016, is a GGP property. Brookfield is offering $14.8 billion to acquire the remaining shares of GGP that it doesn’t already own.

Brookfield Property Partners LP has made a $14.8 billion offer to acquire the shares of mall owner GGP Inc. that it doesn’t already own, according to people familiar with the matter.

Brookfield has offered to pay $23 a share for the remaining 66% of GGP, half in cash and half in equity, some of the people said. GGP investors could choose either cash or 0.9656 of a limited-partnership unit of Brookfield Property for each share, subject to proration that keeps the consideration of cash and units from each exceeding $7.4 billion.

On Friday, GGP shares closed at $22.20, having surged on reports earlier in the week of a potential deal between the companies.

Brookfield currently owns about 34% of Chicago-based GGP, formerly known as General Growth Properties, which has a market value of about $21 billion.

There is no guarantee that GGP will agree to the offer, which Brookfield submitted to the company’s board Saturday, according to a person familiar with the matter. Any deal would also be subject to approval from a majority of non-Brookfield-affiliated GGP shareholders.

GGP owns around 125 high-end retail centers around the U.S., including Tysons Galleria near Washington, D.C., Glendale Galleria outside Los Angeles and Chicago’s Water Tower Place. The company emerged from bankruptcy in 2010 with backing from Brookfield and other investors.

Brookfield Property owns or operates office properties, retail centers, multifamily housing units among about billion in total assets. The firm is part of Brookfield Asset Management, an alternative-asset manager with more than $265 billion under management, including about $150 billion in real estate. Its portfolio includes London’s Canary Wharf and Brookfield Place in lower Manhattan.

If a deal is reached, it would come at a tough time for mall operators, which are struggling to adapt to the migration of shoppers to the web. Before GGP shares rallied earlier in the week, they were down by about 25% so far this year.

GGP operates so-called A malls, premium properties that house movie theaters, restaurants, ice-skating rinks and other entertainment venues alongside traditional retailers. While its properties have held up better than lower-end malls, it has made some changes to adapt to shifting consumer behavior.

Like other mall operators, GGP has taken back spaces from dozens of department stores that no longer draw the heavy foot traffic they once did, replacing them with gyms, high-end grocery stores or fast-fashion retailers.

Part of the rationale of the proposed deal would be to help the mall operator add features to its properties, such as office space, entertainment and apartment blocks, one of the people said.

Appeared in the November 13, 2017, print edition as 'Brookfield Bids for Rest of GGP.'


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