Brookfield Proposes To Take Its Real Estate Wing Private In US$ 5.9Bn Deal

Summary

  • Brookfield Asset Management has proposed to buy the remaining stakes it does not already own in Brookfield Property Partners LP.
  • The proposed deal, valued at US$ 5.9 billion, is meant to take the company’s real estate wing private.
  • Stocks of Brookfield Property Partners shot up about 16 per cent on the Toronto Stock Exchange around 7.30 am ET on Monday, following the announcement of the deal.

Brookfield Asset Management Inc (TSX: BAM.A), along with other institutional investors, plans to purchase the stake it does not own in Brookfield Property Partners LP (TSX: BPY.UN). The deal, valued at US$ 5.9 billion, is meant to take the real estate wing of Brookfield private.

The proposal that the Toronto-based alternative asset manager released on Monday, January 4, pitches to buy the outstanding units of Brookfield Property for US$ 16.5 apiece. At the moment, Brookfield Asset Management owns some 60 per cent of the real estate business.

Brookfield Asset Management (TSX: BAM.A) Vs Brookfield Property Partners

Following the announcement of the deal, Brookfield Property Partners saw its stock price jump about 16 per cent on the Toronto Stock Exchange (TSX) around 7.30 am on Monday. The real estate company took quite a tumble amid the pandemic-triggered market crash, swooping to record lows around March and April. The scrips have since climbed over 24 per cent in the last three months and about 38 per cent in the last six months. It currently has a market cap of C$ 9.2 billion.

Stocks of Brookfield Asset Management, on the other hand, dwindled about three per cent early Monday morning. It posted a growth of 13 per cent in the last three months and of nearly four per cent in 2020.

Image source: ©Kalkine Group 2021

What More Does The Proposal Say?

The Canadian asset management company stated in the proposal that those who have invested in Brookfield Property Partners can:

  • either choose to take the value of US$ 16.5 per unit in cash
  • take 0.4 of the Brookfield Asset Management stock
  • or take 0.66 of the preferred units of Brookfield Property

Shareholders of Brookfield Property REIT Inc, on the other hand, can also take part in this deal once they trade their units for those of Brookfield Property Partners.

The proposal has been submitted to Brookfield Property Partners’ board of directors, which is expected to review the offer via a special committee.

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