According to a recent US equity research report put out by Mizuho Securities USA, since Brookfield Property has made an improved offer for General Growth Properties, the firm has upgraded the REIT’s status to “buy.”
The reason? According to one analyst was because the increased cash and shares in a to-be-formed REIT is favorable and “raises the probability of a deal getting done.”
The Mizuho Securities USA report on the subject said that it thinks GGP is worth $26 but is raising its pricing target estimates to $24 (and upgrading GGP to Buy) given the “lack of details and incentive for BPY to up its offer dramatically.”
The analyst says that BPY’s new approach isn’t a surprise and comes after GGP rejected BPY’s November 2017 $14.8-billion cash and stock offer. “We continue to expect a deal to get be consummated and think BPY’s improved offer is a key step towards securing GGP. The key question is ‘how much’ (is GGP worth)?” Recent comps, according to the firm, have led some to think GGP should fetch an offer close to $30.
According to the firm’s Q4 report to its investors, for the three months ended December 31, 2017, net income attributable to GGP was $202 million, or $0.21 per diluted share, as compared to $236 million, or $0.24 per diluted share, in the prior year period. For the 12 months ended December 31, 2017, net income attributable to GGP was $657 million, or $0.69 per diluted share, as compared to $1.29 billion, or $1.36 per diluted share, in the prior year period.
GGP is a retail real estate company headquartered in Chicago, and publicly traded on the NYSE under the symbol.