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Brookfield takes real estate private in $6.5B deal

Brookfield Property Partners (BPY) is taking its real estate private in a $6.5 billion deal with majority owner, Brookfield Asset Management (Brookfield).

The company announced today that it has reached agreement for Brookfield to acquire all of its limited partnership units at a value of $18.17 per unit.

The offer represents an increase of 10 percent increase on a non-binding proposal made by Brookfield in January and a 26 percent premium December share price. Brookfield already owns 60 percent of BPY, whose $88 billion portfolio includes iconic properties in the world’s major markets, including Brookfield Place in Manhattan and Canary Wharf in London.

NICK GOODMAN

Brookfield CFO Nick Goodman said the deal was the best move to maximize shareholder value in a company whose investment in major long-term developments such as Manhattan West – BPY’s 5.4 million square foot mixed-use development in the Hudson Yards – artificially deflated its true worth.

 “We are pleased to have reached agreement with BPY’s independent directors on a transaction we believe is appealing to BPY unitholders in many aspects and allows for greater optionality in how we manage our portfolio of high-quality real estate assets,” said Goodman.

“Not only can unitholders choose to receive a meaningful portion of their consideration in cash at a significant premium, but they will also have the option to remain invested in the future upside of our real estate business and alternative asset management franchise.”

Analysts called the buyout “attractive” noting that, in the five years leading up to the coronavirus pandemic, Brookfield Property units have traded at a discount ranging between 20 and 45 percent of its consensus net asset value. The company reported a $2 billion loss last year as COVID closed malls and offices and its shares fell 21 percent.

Lazard Frères & Co., acting as independent valuator and financial adviser to a special buyout committee, considered a fair market value of a BPY unit was in the range of $14.00 to $18.50 and called the Brookfield offer “fair, from a financial point of view.”

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