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Brookfield Asset Management Inc and a group of investors has offered to purchase a stake in Brookfield Property Partners, which they do not yet own, for $ 5 billion, offering to take the real estate company privately

The Canadian alternative asset manager has announced that it will acquire the outstanding shares for US $ 16 at a premium of 50 or around 14 percent on the closing price on Thursday in New York Brookfield Asset Management already owns around 60 percent of Brookfield Property Partners A market value of $ 13.8 billion as of Thursday are over
Brookfield Property Partners’ shares rose 18 percent to $ 1714 apiece in New York trading Monday, according to an earlier Bloomberg News report

The privatization of Brookfield’s real estate subsidiary is attractive because it has consistently traded at a discount to the underlying value of its assets, said Nick Goodman, chief financial officer of Brookfield Asset Management, in an interview

“We believe it has been consistently discounted for more than just last year,” Goodman said. We believed this would be a premium offering for the market as it has a unique global portfolio and some of the highest quality properties in the market However, world has made repeated efforts to trade at net asset valueâ ????

While Brookfield Property Partners was trading at lows just before the Covid-19 pandemic began in March, Brookfield waited for unit prices to stabilize to fuel privatization efforts, Goodman said
The stock also trades at a discount, as much of the company’s value was created by developing long-term projects like Manhattan West in New York, part of the Hudson Yards redevelopment, Goodman added. Such projects can take years Generate returns for investors

“We have built more conviction over time that the right shape for this is in the private markets,” he said

As part of the proposal, Brookfield Property Partners investors can choose either the $ 1650 per unit of cash or select 04 of Brookfield Asset Management shares or 066 of Brookfield Property Preferred Units of Holders of Class A Shares instead Brookfield’s other publicly traded real estate company, Brookfield Property REIT Inccan participate as soon as they exchange their shares for units from Brookfield Property Partners

Brookfield Property Partners and Brookfield Property REIT confirmed that they received the proposal in a separate statement Monday Brookfield Property Partners has formed a special committee of independent directors to consider the offer and it is said that investors at this point will be open no need to take action

Every transaction would be subject to a vote that would require the approval of a majority of minority owners, Goodman


According to Dean Wilkinson, analyst at CIBC Capital Markets, the proposal should be attractive to both Brookfield Property investors and Brookfield Asset Management in the current marketplace. Brookfield Property management has tried for years to narrow the trade discount, in part because some of its assets in the portfolio, namely US. Shopping malls have been a barrier to realizing a higher, more reasonable rating, he said

Wilkinson said he hadn’t seen a catalyst that would improve the situation, given the gap between the asking price and the value of the underlying assets, he said there should be room for modest negotiationâ ????

“Such a negotiation is in line with previous transactions within the Brookfield family of companies,” he said in a note to clients on Monday. He raised his target price to $ 1750 accordingly

Brookfield Property Partners owns, operates and develops one of the largest real estate portfolios in the world. At the end of September, the company had total assets of approximately $ 88 billion, including developments such as London’s Canary Wharf and Brookfield Place in New York. Brookfield acquired in 2018 GGP Inc, the second largest mall operator in the US.for about $ 15 billion

The pandemic has hit the company hard as widespread home stay contracts keep workers out of offices and shoppers from malls. Brookfield Property Partners’ shares fell more than 20 percent over the past year, despite moving away from theirs Lows in March have doubled again

Brian Kingston, chief executive officer of Brookfield real estate group, said in a letter to shareholders in November that he believed the worst of the crisis was now behind the company and that he continued to see signs of recovery from the economic shutdown

Brookfield Property Partners

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