CHICAGO—GGP Inc. on Monday confirmed that it had received an unsolicited bid from Brookfield Property Partners (BPY) to acquire the outstanding shares of the mall REIT that it doesn't already own. At $23 per share, the deal would be valued at approximately $14.8 billion.
GGP's board has formed a special committee to review BPY's proposal, with Goldman Sachs serving as financial advisor and Simpson Thacher & Bartlett LLP serving as legal counsel to the special committee. Citigroup Global Markets Inc. is serving as GGP's financial advisor, and Sullivan & Cromwell LLP is serving as its legal counsel.
For its part, BPY says the acquisition of GGP would create one of the world's largest listed property companies. The combined company would have an ownership interest in almost $100 billion of real estate assets globally and annual NOI of approximately $5 billion.
“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,” says BPY CEO Brian Kingston. “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.”
BPY's unsolicited bid for GGP, first reported by the Wall Street Journal on Sunday, follows last week's published reports that the two companies were in preliminary discussions about a possible takeover. Brookfield currently holds a 34% stake, and has been an investor in GGP since the company—then known as General Growth Properties—chose it as a co-investor when it emerged from bankruptcy in 2010.
In a note to investors Monday, Mizuho Securities analysts weren't wholly enthusiastic about the bid. “While the offer is encouraging, cementing BPY's rumored interest and the recent M&A euphoria, it falls short of GGP private market value estimates and investor expectations,” they wrote. They added that given private-market values for mall of GGP's caliber generally estimated in the low to mid-5% range, “the BPY offer implies the 'A' mall REITs may not be as cheap as their stock prices and investor expectations suggest, implying a dramatic shift in pricing.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
