Brookfield Property Partners L.P.
), which already has a 51% stake in
Brookfield Office Properties Inc.
), is seeking to buy the remaining stake of the latter in a cash
and stock deal valued at $5 billion.
The move will result in a one of the biggest global commercial
real estate company with consolidated assets of $45 billion
alongwith ownership of a diversified portfolio spanning over 330
million sq. ft.
Structured as a cash and stock offering, each Brookfield Office
share is valued at $19.34, reflecting a 15.3% premium over
Brookfield Office's friday's closing price of $16.77 per share.
Shareholders of Brookfield Office can either opt for $19.34 in
cash or one limited partnership unit of Brookfield Property for
each Brookfield Office share they hold. This is, however, subject
to a maximum cash consideration of $1.7 billion. The company
plans to finance the cash part of the deal through an acquisition
facility with a syndicate of banks.
On the other hand, shareholders who will receive Brookfield
Property stock can enjoy a 79% uptick in the quarterly dividend
per share as well as an 18% increase in the book value per share.
If the deal culminates, the shareholders of Brookfield Property
too can benefit from its increased size and scale. The combined
portfolio would have several office, retail, industrial and
multi-family assets in major global gateway markets in the U.S.,
Canada, Australia and the UK.
Moreover, the company would gain from the increased exposure to
office assets positioned in the supply constrained markets.
Brookfield Office has a strong tenant base consisting of a roster
of major tenants with over one million square feet of space. Its
Bank of America Corporation
)/Merrill Lynch, the U.S. and Canadian governments and government
Wells Fargo & Company
)/Wachovia and a number of other reputed companies.
In addition, Brookfield Property Partners' public float will
increase to around $4 billion significantly boosting the trading
liquidity of its units. As such, the company could gain from a
rise in accessibility to the capital markets and lower borrowing
Notably, earlier this year the global alternative asset manager -
Brookfield Asset Management - had spun off its commercial real
estate unit, Brookfield Property.
The news has been much welcomed by the shareholders that led to a
13.7% rise in Brookfield Office's stock price yesterday. Also,
the shares of Brookfield Property have gone up a few cents.
Brookfield Office currently has a Zacks Rank #3 (Hold).
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