Brookfield Property Partners Going Private in $6.5B Deal

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Brookfield Asset Management will take its property arm, Brookfield Property Partners (BPY), private in a $6.5 billion deal, Brookfield Asset announced Thursday.

The asset management firm plans to buy the rest of the shares of BPY, one of North America’s largest landlords, that it doesn’t already own for $18.17 per share in cash, according to Brookfield Asset.

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The deal was unanimously approved by BPY’s board, but still needs to be voted on by the real estate investment trust’s (REIT) shareholders. If given the green light, BPY will go private in the third quarter of this year.

“We are pleased to have reached an agreement with BPY’s independent directors on a transaction we believe is appealing to BPY unitholders in many aspects and allows for greater optionality in how we manage our portfolio of high-quality real estate assets,” Nick Goodman, managing partner and CFO of Brookfield Asset, said in a statement. “Not only can unitholders choose to receive a meaningful portion of their consideration in cash at a significant premium, but they will also have the option to remain invested in the future upside of our real estate business and alternative asset management franchise.”

BPY — which owns properties like One Manhattan West and Brookfield Place in New York City — faced a tough 2020, as the coronavirus pandemic forced office workers to stay home and retailers to temporarily shutter for months. As a result, BPY lost $2 billion last year, which it blamed on “unrealized reductions of values of certain assets.” 

Its retail side took the biggest hit, with its funds for operation falling from $772 million in 2019 to $550 million in 2020, while occupancy dropped by 90 basis points to 92.5 percent. On the office front, BPY’s funds from operations dropped from $662 million in 2019 to $540 million in 2020, while its occupancy also dipped by 90 basis points to 89.8 percent.

Still, BPY owns about $88 billion in total assets and had profits of $3.16 billion in 2019.

BPY was formed in 2013, when Brookfield Asset Management spun it off into a public company that traded on both the Toronto and New York stock exchanges. The REIT made a splash in 2018 after it bought mall owner GGP for $9.25 billion in cash.

Brookfield Asset Management announced in January that it planned to take BPY private, with the original deal being worth $5.9 billion, Bloomberg reported. Goodman told Bloomberg the move to go private was spurred by the thought that BPY’s stock traded at a discount compared to the value of its assets, well before the pandemic hit.