Brookfield Asset Management offers to take Brookfield Property private in $5.9 billion deal

People walk through the Brookfield Place Pavilion at the World Trade Center West Concourse pedestrian transit connection in New York City.

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Brookfield Asset Management said Monday it has made an offer to take its commercial real estate arm Brookfield Property Partners private in a $5.9 billion deal.

The Canadian asset-management firm is offering $16.50 for each Brookfield Property share it does not already own.

“The privatization will allow us to have greater flexibility in operating the portfolio and realizing the intrinsic value of BPY’s high-quality assets,” Brookfield Asset Management CFO Nick Goodman said in a statement.

Brookfield Property has roughly $88 billion in assets, including office buildings, malls, self-storage facilities and logistics hubs. Due to the effects of the Covid pandemic, the value of many of its properties has fallen. Retail and office spaces are seen as especially risky bets as vacancies rise and more people are adjusting to shopping and working from home.

In September, Brookfield Property’s retail arm cut about 20% of its workforce across its corporate headquarters and leasing agents in the field. It became one of the largest mall owners in the country when Brookfield Property Partners acquired the Chicago-based mall owner GGP for $9.25 billion in 2018. But now, it is looking to hand back the keys to lenders on a number of struggling retail assets.

On the Nasdaq, Brookfield Property shares are down about 20% from a year ago. The stock soared more than 17% in early trading Monday, while Brookfield Asset Management shares were down fractionally.

In a separate press release, Brookfield Property said its board has established an independent committee to review the proposal.

The $16.50 per unit price represents a premium of 14.9% and 14%, respectively, to the Dec. 31 closing prices of Brookfield Property shares on the Toronto Stock Exchange and Nasdaq. Shareholders will be able to elect to receive $16.50 in cash for each Brookfield Property unit, 0.40 Brookfield Class A shares, or 0.66 of Brookfield Property preferred units with a liquidation preference of $25 per unit, Brookfield Asset Management said.

Brookfield Asset Management, which has about $575 billion in assets under management, said it is not proposing to acquire other securities of Brookfield Property and its subsidiaries. Those are expected to remain outstanding.

Read the full press release here.