Brookfield Property to raise stake in General Growth in US$1.4-billion deal

TORONTO – Brookfield Property Partners LP (TSX:BPY.UN) has outlined a US$1.4-billion plan to buy a bigger stake in General Growth Properties Inc. (NYSE:GGP), a major U.S. shopping mall company.

Part of the funding for the transaction will come from US$435 million worth of BPY units that will be sold to Investment Corporation of Dubai, a sovereign wealth fund owned by the Dubai government.

The deal is part of a broader reorganization of a consortium led by Brookfield Asset Management Inc. (TSX:BAM.A), a Toronto-based company with real estate holdings around the world.

Brookfield will help fund the transaction by buying nearly US$1 billion of equity in a BPY subsidiary. Brookfield will also sell about $529 million of its GGP entitlements to BPY.

Brookfield Property, a Bermuda-based publicly traded subsidiary of Brookfield Asset Management, will also acquire additional holdings from other members of the consortium.

Under the proposed transaction, BPY will increase its stake in General Growth to between 28 and 32 per cent, depending on whether it exercises all the stock purchase warrants it will acquire.

To do so, BPY will acquire some interests currently held by other members of the consortium, including Brookfield.

Brookfield Property says it will fund the transaction by issuing US$995 million of exchangeable units of a subsidiary to Brookfield Asset and US$435 million worth of BPY units to Investment Corporation of Dubai.

BPY will continue to be part of a consortium of institutional investors that collectively owns about 40 per cent of General Growth.