Brookfield Asset Administration is providing to take Brookfield Property personal for $ 5.9 billion

People walk through the Brookfield Place Pavilion on the pedestrian walkway of the World Trade Center West Concourse in New York City.

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Brookfield Asset Management announced Monday that it had made an offer to take its commercial real estate sector Brookfield Property Partners private in a $ 5.9 billion deal.

The Canadian wealth management firm is offering $ 16.50 for every Brookfield Property share it does not already own.

“The privatization will allow us to operate the portfolio more flexibly and realize the intrinsic value of BPY’s high quality assets,” said Nick Goodman, CFO of Brookfield Asset Management, in a statement.

Brookfield Property has approximately $ 88 billion in net worth including office buildings, shopping malls, self-storage facilities and logistics centers. Due to the effects of the Covid pandemic, the value of many of its properties has declined. Retail and office space are considered particularly risky bets as vacancy rates rise and more and more people adjust to shopping and working from home.

In September, Brookfield Property’s retail division cut approximately 20% of its headcount and leasing agent workforce in this area. It grew to become one of the largest mall owners in the country when Brookfield Property Partners acquired Chicago-based mall owner GGP for $ 9.25 billion in 2018. Now the company plans to return the keys to a number of difficult retail items to lenders.

On the Nasdaq, Brookfield Property stocks are down about 20% year over year. The stock rose 18% on the Monday before trading, while Brookfield Asset Management’s shares were flat.

In a separate press release, Brookfield Property announced that its board of directors had set up an independent committee to review the proposal.

The price of $ 16.50 per share represents a premium of 14.9% and 14%, respectively, over the closing prices of Brookfield Property shares on the Toronto Stock Exchange and the Nasdaq on December 31st. Shareholders can choose to receive $ 16.50 cash for each Brookfield Property unit, 0.40 Brookfield Class A share, or 0.66 of Brookfield Property Preferred Units with a liquidation preference of $ 25 per unit, Brookfield said Asset management.

Brookfield Asset Management, which has approximately $ 575 billion in assets under management, does not intend to acquire any further securities from Brookfield Property and its subsidiaries. These will probably still be outstanding.

The full press release can be found here.

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