Brookfield Asset Management is taking its property business — the mall giant Brookfield Property Partners — fully under its wing in a $6.5 billion buyout.
The deal, first proposed in early January at $5.9 billion, is being facilitated by an Ontario court and is expected to close in the third quarter. Investors holding units of the property group can elect to take $18.17 in cash per unit, Brookfield stock or a combination of the two.
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The asset management firm negotiated the deal with the independent directors of the property business, which lent its name to Brookfield Place, the mammoth mixed use development in Manhattan.
Nick Goodman, chief financial officer of Brookfield Asset Management, described the deal as “appealing” to investors in the property business and said it “allows for greater optionality in how we manage our portfolio of high-quality real estate assets.”
On a conference call with Wall Street analysts last month, Goodman was asked about the right balance between selling assets and moving them to other existing Brookfield funds.
“We’ll have to see how it evolves,” Goodmans said. “We have a view that we have a portfolio of very, very high-quality assets that should be attractive to clients. And over time, we should be able to create products around these assets that will be attractive. But as you say, that will be balanced with some assets that it makes sense just to sell outright. The exact breakdown of that, it’s hard to say. It will be case by case.”
The retail real estate market was already in major flux, with the rise of e-commerce and then the coronavirus pandemic, which has had both companies and consumers reevaluating their brick and mortar relationships.
Everything is seemingly on the move.
Last year, Simon Property Group bought mall competitor Taubman Centers. (Simon also teamed with Brookfield to buy tenant J.C. Penney Co. out of bankruptcy.)
As Brookfield examines its path forward for its various properties, the market promises to remain busy especially as competitor Unibail-Rodamco-Westfield expects to begin selling its major U.S. properties next year as investor interest grows.
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