Shoppers stroll through Faneuil Hall Marketplace in Boston, owned by General Growth Properties.Michael Dwyer
Deep-pocketed Canadian companies are emerging as the saviours of troubled American peers, with Brookfield Asset Management preparing to step in as the white-knight bidder for one of the largest U.S. mall owners.
Brookfield is spearheading a friendly rescue of General Growth Properties Inc. that could top more than $10-billion (U.S.), according to the Wall Street Journal. General Growth owns more than 200 malls across America, sought creditor protection last April, and attracted a hostile bid last week from rival Simon Property Group Inc.
For Brookfield chief executive officer Bruce Flatt, this deal offers the chance to buy marquee properties for a perceived bargain price, in much the same way Brookfield swooped on London, England's marquee Canary Wharf development after the Reichmann family ceded control of the project to lenders.
If successful in bidding for General Growth - a formal offer could be tabled this week, according to reports - Brookfield would be at the forefront of an expected wave of south-bound takeovers.
Canadian banks, insurers and energy companies are all looking at deals with weaker U.S. rivals. Many of the largest domestic companies have emerged from the recession with stronger balance sheets than American peers. CEOs and investment bankers predict that once there's a clear sense that the economy will continue to rebound in 2010, Canadian companies will expand with acquisitions.
Toronto-Dominion Bank and Manulife Financial, for example, are expected to be active shoppers in the bargain basement section of U.S. financial services. Fertilizer maker Agrium is attempting to build its U.S. presence with a long-running hostile $5.4-billion run at rival CF Industries. At Brookfield, Mr. Flatt runs a company with more than $100-billion (Canadian) of real estate, power and infrastructure asset.
Brookfield recently raised a $4-billion (U.S.) fund from backers such as insurance companies and pension funds that targets distressed real estate plays. Toronto-based Brookfield keeps a relatively low profile, but it is already one of the biggest office-tower owners in the U.S., with properties in Manhattan, Washington, Houston and Los Angeles. General Growth would fill out Brookfield's portfolio.
The Chicago-based company is a landlord to 24,000 stores. General Growth filed for creditor protection last year with more than $27-billion in debt.
With a report from reporter Joanna Slater
Andrew Willis