Toronto-listed Brookfield Property Partners LP plans to buy Brookfield Office Properties Inc. in a $5-billion US deal that it said will create one of the world's largest commercial property companies.
Brookfield Property Partners, which already owns a 51 per cent stake in Brookfield Office Properties, has offered one unit of Brookfield Property Partners or $19.34 US in cash for each BPO share.
The amount of cash offered under the deal is limited to $1.7 billion or roughly one-third of the offer, while the number of units is capped at 174 million.
"The combination of these leading commercial real estate platforms will create a diversified portfolio of best-in-class real estate for investors seeking attractive risk-adjusted returns, through income and capital appreciation," Ric Clark, chief executive of Brookfield Property Group, said in a statement.
Consolidates global office properties
"In addition, we believe this transaction will consolidate our global office properties under one platform and substantially increase Brookfield Property Partners' public float, which should help accelerate our growth strategy."
Shares in Brookfield Office Properties were up $2.31 Cdn at $19.60 Cdn Monday afternoon, while Brookfield Property Partners units were unchanged at $20 on the Toronto Stock Exchange.
For shareholders of Brookfield Property Partners, the company said the deal will mean increased trading liquidity, more exposure to office properties and reduced costs.
Bermuda-based Brookfield Property Partners is the commercial real estate unit of Brookfield Asset Management Inc., which was spun off earlier this year.
It has interests in more than 300 office and retail properties, 20,000 multi-family units, 62 million square feet of industrial space and a 19-million-square-foot office development pipeline. Once the deal closes, it will have $45 billion of assets.
Brookfield Office Properties owns a portfolio of office buildings in the U.S., Canada, Australia and Britain.
The New York-based company said its board of directors had established a special committee to "review and consider the proposal."
New financial officer
"Shareholders of Brookfield Office Properties do not need to take any action with respect to the proposal at this time," it said.
Brookfield Property Partners named John Stinebaugh as its new chief financial officer on Friday. He took over from Steve Douglas, who was taking a different post at Brookfield after "fulfilling his commitment to oversee the launch of Brookfield Property Partners."
Stinebaugh was previously CFO of the Brookfield Infrastructure Group, and was replaced by Bahir Manios.
Brookfield Infrastructure Partners and Brookfield Renewable Energy Partners are among the main subsidiaries within the Brookfield group.
Brookfield is one of Canada's largest asset managers, with investments in a wide number of publicly traded entities primarily focused on real estate, power generation and natural resources, particularly in the forestry sector.