Brookfield Offers To Buy Remaining Stake In Real Estate Unit In $5.9 Billion Deal

Canada’s Brookfield Asset Management Inc said on Monday it had offered to buy the remaining stake in its commercial real estate business, Brookfield Property Partners LP, in a $5.9 billion deal.

The move comes as the coronavirus pandemic drives a shift to working from home, while keeping people away from malls and shopping centers, hurting companies such as Brookfield property, which has about $88 billion in assets including Canary Wharf in London and Brookfield Place in New York.

The alternative-asset manager owns nearly 34% of the real estate firm, according to Refinitiv data, and has offered $16.50 for each Brookfield Property shares it does not already own, a premium of 14% to Thursday’s close.

Shares of Brookfield Property Partners rose about 17%, while those of Brookfield Asset Management fell 5% on the Toronto Stock Exchange.

“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 Chief Financial Officer Nick Goodman said.

Brookfield Property shares fell nearly 21% last year, failing to gain much ground from their record lows hit in April, making the company an attractive option, analysts said.

“It’s just really the persistent discount that BPY shares were trading … because of the exposure to retail and the pandemic, it exasperated the discount and that may have prompted the move at this time,” Evercore ISI analyst Sheila McGrath said.

“They’re getting it an attractive price if this price is indeed the final one.”

Mall landlords have also spent millions to rescue retailers that were on the brink of bankruptcy, with Brookfield Asset Management acquiring names such as J.C. Penney and Forever 21 last year.

Brookfield Property’s board has set up a committee to review the deal, the company said in a separate statement.

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