GGP, Brookfield Deal With Themselves So Brookfield Controls GGP

Updated on

I always maintained that Brookfield Asset Management Inc. (NYSE:BAM) (or its affiliates) had every intention and would eventually raise its stake so it would effectively control General Growth Properties Inc (NYSE:GGP) (thus the reason they turned down the Simon Property Group Inc (NYSE:SPG) offer) despite their claims to the contrary.

GGP, Brookfield Deal With Themselves So Brookfield Controls GGP

Brookfield Property Partners has agreed to buy an additional $1.4 billion worth of General Growth stock, bringing its stake in the Chicago–based REIT to 32 percent. “As a result of this and General Growth’s strong organic growth prospects, we believe that the investment will earn a return that exceeds our target range of 12 percent to 15 percent,” said Ric Clark, CEO of Brookfield Property Group, in a press release. Brookfield Property Partners LP (NYSE:BPY), a subsidiary of Toronto-based Brookfield Asset Management, owns 300 office and retail properties totaling 250 million square feet. Its portfolio also includes a 37 percent stake in General Growth Properties Inc (NYSE:GGP) spinoff Rouse Properties and 2.9 million square feet of Brazilian retail properties.

The transaction is part of a reorganization of a Brookfield Asset Management-led consortium of investors that helped recapitalize General Growth when it emerged from bankruptcy protection in March 2010. In April 2013, Brookfield Property Partners bought Brookfield’s interest in the consortium. Now, several of the original investors have cashed out, and the consortium is being consolidated. Its total stake in General Growth Properties Inc (NYSE:GGP) will be 40 percent after the latest deal closes in the fourth quarter.

From the Brookfield Asset Management Inc. (NYSE:BAM) webiste:

Richard (Ric) Clark
Ric is a Senior Managing Partner and global head of real estate at Brookfield Asset Management Inc. (NYSE:BAM), CEO of Brookfield Property Partners, chairman of Brookfield Office Properties, a member of the boards of directors of General Growth Properties and co-heads Brookfield’s opportunistic real estate investing programs with Barry Blattman

We should also note that Brookfield Asset Management Inc. (NYSE:BAM) owns 55% of Brookfield Property Partners LP (NYSE:BPY).

This is why I liquidated my General Growth Properties Inc (NYSE:GGP) position. The self dealing, conflicts of interest and outright misstatements from Brookfield at all levels are something I want no part of….now or ever….

Remember, Flatt/Clark orchestrated this pseudo takeover of GGP (without an auction or shareholder vote) by BAM while sitting on the Board of Directors and managements of both organizations

For more on Brookfield Asset Management Inc. (NYSE:BAM) please follow the link and read Roddy Boyd’s outstanding work

Leave a Comment