One of the biggest real estate mergers in years is nearing completion. Brookfield Property Partners reached an agreement to buy General Growth Properties after increasing its bid, the company announced Monday.
The agreement comes after GGP rejected a $14.8 billion cash-and-stock buyout offer (or $7.4 billion in cash) from Brookfield last November. After an independent board called the bid inadequate, the two sides went back into negotiations.
Brookfield will now pay up to $9.25 billion cash — at $23.50 per share — and the remainder in shares, according to the statement. When the fund manager first bid for the retail real estate investment trust in November it offered up to $7.4 billion in cash at $23 per share.
GGP stock traded at $21.20 as of market close Monday, down from a July 2016 peak of $31.95.
As part of the deal, Brookfield is creating a new REIT, dubbed BPY U.S. REIT. GGP shareholders who don’t get cash for their shares can exchange them for shares in the new REIT, which can in turn be exchanged for units in Brookfield Property Partners.
The acquisition will enhance Brookfield Property’s negotiating power with retailers. GGP owns about 127 “A” level mall properties. 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.
“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,” Brookfield Property Partners CEO Brian Kingston said in a statement.
Brookfield reportedly mulled a GGP acquisition as early as January 2016. As of December 2017, Brookfield already owned 34 percent of GGP’s shares. Its first buyout offer was rejected.
Locally, the Tucson Mall and Park Place Mall would be included in the takeover.