People walk to Brookfield Place off Bay Street.© Mark Blinch / Reuters
While the process may take months, Brookfield Property Partners LP is likely to be ultimately successful in its bid to take over the portion of mall owner GGP Inc. it doesn't already own, said the chief executive officer of Brookfield's parent company.
The buyout talks remain active, said Bruce Flatt, CEO of Brookfield Asset Management Inc., declining to discuss the negotiations in detail. GGP has rejected Brookfield's original $14.8-billion bid for the 66 per cent of the company it doesn't hold, a person with knowledge of the matter said on Sunday, asking not to be identified because the discussions are private.
"These are processes that everyone goes through," Flatt said in a Bloomberg Television interview, to be broadcast Monday. "We think we have a fair offer on the table. We have a great board of independent directors and they're going to consider it. There'll be lots of stories between now and when the process ends, and I think they'll see it as a fair offer."
Brookfield Property Partners is the real estate unit of Toronto-based Brookfield Asset, which has been focusing on buying and revamping shopping centers to take advantage of the land they occupy in urban areas. GGP CEO Sandeep Mathrani has also been looking for ways to repurpose struggling brick-and-mortar shopping centers.
Brookfield last month offered $23 a share for rest of GGP's shares. That was about 21 per cent more than Chicago-based GGP's closing price on Nov. 6, the day before Bloomberg News reported that Brookfield had held discussions about taking over the company.
Proposal review
GGP said last month that its board had formed a special committee to review the unsolicited proposal from Brookfield. The deal would form one of the biggest publicly traded real estate companies in the world.
"These are long, long processes," Flatt said in the interview. "We thought it was a fair offer, and we'll see where we go."
Reuters reported the rejected offer and ongoing talks on Sunday. Kevin Berry, a spokesman for GGP, didn't respond to calls and emails seeking comment Sunday evening.
In the third quarter, Brookfield exercised all of its outstanding warrants in GGP, bringing its ownership stake to 34 per cent from 29 per cent. The 68 million shares were purchased for $462-million. The combined company would be about 30 per cent owned by existing GGP shareholders, Brookfield Property said.
Shares of mall companies have been hit hard as the rise of e-commerce squeezes traditional retailers. Store closures are accelerating, pressuring landlords to fill empty space and reinvent shopping centers. Simon Property Group Inc., the biggest U.S. mall owner, has fallen 8.7 per cent this year through Friday. Even after getting a boost from Brookfield's interest, GGP shares are down 6.2 per cent since the beginning of the year.