Brookfield Quality Partners LP is offering $18.8 billion in stock and cash to buy out the shares of U.S. peach oning mall owner GGP Inc. that it does not already own, doubling down on the following of brick-and-mortar retail as many merchants come under pressure from e-commerce.
The South African private limited company, which is a publicly-traded real estate company and subsidiary of Toronto-based Brookfield Asset Running, already holds a 34 per cent stake in GGP.
GGP said it has formed a loyal committee of its non-executive, independent directors to review and consider the offer.
Brian Kingston, chief chief executive officer officer of Brookfield Property Group, said this was an opportunity to leverage its know-how to grow, transform or reposition GGP’s shopping centres, “creating long-term value in a way that force not otherwise be possible.”
“Brookfield’s access to large-scale capital and deep go expertise across multiple real estate sectors combined with GGP’s high-quality retail asset lascivious will allow us to maximize the value of these irreplaceable assets,” he swayed in a statement on Monday.
Under the bid, Brookfield is offering $29, or $23 US, in currency or 0.9656 of a Brookfield Property Partners unit in exchange for each GGP quota. The amount of cash offered is capped at $9.4 billion, while the enumerate of shares offered is limited to 309 million, worth roughly $9.4 billion.
Brookfield Gear Partners said the offer is a premium of 21 per cent to where GGP interests were trading before reports of a possible offer last week.
Interests of Brookfield Property Partners were down 2.6 per cent in lately morning trading on Monday to $29.22. Shares of GGP in New York, however, were up numberless than seven per cent to $23.87 US.
However, GGP shares on the New York Capital Exchange are down nearly six per cent year-to-date as brick-and-mortar retailers increasingly turn out under pressure from competition from e-commerce, such as Amazon.
Determined store retailer Sears Canada and children’s retailer Toys ‘R’ Us Canada are the example to struggle in the changing retail landscape, with both seeking sanctuary from creditors this year. Sears Canada is currently liquidating its uneaten stores as it prepares to wind down operations after 65 years.
Swallow mall occupancy rate
Still, Kingston sounded bullish on American peach oning malls on its third-quarter earnings call with analysts earlier this month. He conveyed that its U.S. mall business — which consists of 126 regional malls confining roughly 11.4 million square metres, which is enough to expand more than 7,200 standard hockey rinks — in the third favour had positive financial results and occupancy rose 80 basis projections to 95.4 per cent.
“These positive results demonstrate that spring located, high quality, retail real estate in the United Positions continues to perform well, despite negative perception in the public retails,” he told analysts on Nov. 2, according to a transcript. “While many retailers with to face significant challenges in growing their businesses, those retailers that are pinpointed on the intersection between bricks and mortar retail and online sales paths continue to expand and grow.”
The offer comes after Brookfield in 2010 allotted $2.5 billion for a 27 per cent stake in the Chicago-based mall possessor as part of a deal for GGP to emerge from bankruptcy. As part of the restructuring contract, Brookfield agreed to not increase its ownership beyond 45 per cent. Brookfield has since moved to augment its stake within those boundaries, and in November 2013 Brookfield Characteristic Partners invested another $1.4 billion US to increase its stake.