Brookfield Property Partners L.P. and the Special Committee of the Board of Directors of GGP Inc. revealed that that BPY and GGP Inc. have entered into a definitive agreement for BPY to acquire all of the outstanding shares of common stock of GGP other than those shares currently held by BPY and its affiliates.
In the transaction, GGP shareholders will be entitled to elect to receive, for each GGP common share, either $23.50 in cash or either one BPY unit or one share of a new BPY U.S. REIT security, subject to proration based on aggregate cash consideration of $9.25 billion.
The Special Committee, comprised of non-executive, independent directors, has unanimously recommended that GGP shareholders approve the transaction. The Special Committee believes the transaction is fair to and in the best interests of GGP shareholders.
As a result of the transaction, GGP shareholders who receive equity consideration will be entitled to receive the same amount as BPY’s current distribution on the BPY units or BPR shares they receive, which is over 40% higher than GGP’s dividend (BPY annual distribution of $1.26 per unit vs. GGP dividend of $0.88 per share).
Brian Kingston, CEO of Brookfield Property Partners, says “This is a compelling transaction that enables GGP shareholders to receive premium value for their shares and gives them the ability to participate in the long-term upside of their investment. We are pleased to have reached an agreement and are excited about combining Brookfield’s access to large-scale capital and deep operating expertise across multiple real estate sectors with GGP’s portfolio of irreplaceable retail assets.”
He continues, “The introduction of the new BPR shares will allow GGP shareholders to efficiently participate in the transaction.”
Daniel Hurwitz, Lead Director and Chairman of the Special Committee, said, “Since receiving Brookfield’s initial proposal in November, the Special Committee has conducted extensive due diligence, specifically evaluating the optimal consideration structure for GGP’s shareholders. After careful consideration, assisted by our independent advisors, the Special Committee determined that Brookfield’s improved proposal, which includes an increase in the cash portion of the consideration and the ability to receive shares in a newly listed REIT entity, provides GGP shareholders with certainty of value, as well as upside potential through ownership in a globally diversified real estate company. We are pleased to have reached this agreement, which we believe is in the best interests of GGP and our shareholders.”
With an ownership interest in approximately $90 billion in total assets and annual net operating income of more than $4 billion, the combined company will be one of the world’s largest commercial real estate enterprises. Following completion of the transaction, GGP shareholders will own approximately 26% of the combined company (calculated based on all BPR shares having been exchanged for BPY units and pro forma for the proposed BAM preferred share conversion as described below), which will possess one of the highest quality and most diverse portfolios of property globally, with a fortress balance sheet and strong overall financial profile.
Check back with The REIT Wire tomorrow morning for more from the deal including transaction details and analysts take on the deal.