Brookfield Asset Management Inc. is betting against the retail apocalypse with its takeover of GGP Inc., slated to close Tuesday.
The Toronto-based firm is paying about $15 billion for the second-largest mall owner in the U.S. as investors -- and shoppers -- shun brick-and-mortar retail. Brookfield, which already owned a third of GGP, was the only bidder that showed up when the company put itself on the block last year.
Brookfield’s top real estate executive wasn’t surprised.
“We look for places where people are running away from,” said Brian Kingston, chief executive of Brookfield Property Partners LP, the asset manager’s publicly traded real estate arm. “Ultimately we’re value investors. So that means many times it leads you to being contrarian.”
That willingness to zig while others zag helped make Brookfield the top real estate dealmaker in North America this year by total transaction value, surpassing traditional powerhouse Blackstone Group LP, according to data compiled by Bloomberg. Brookfield has announced about $23 billion worth of transactions this year.
Other high-profile deals include Brookfield Asset Management’s agreement in July to pay $6.8 billion for Forest City Realty Trust Inc., which owns office and apartment buildings in Boston, Chicago and Dallas.
This month, Brookfield took a 99-year-lease on 666 Fifth Ave., the Manhattan skyscraper owned by Kushner Cos., the family business of presidential son-in-law Jared Kushner. Brookfield intends to update the aging property to attract new tenants willing to pay more, as it did with 5 Manhattan West. The firm has been able to raise rents to about $100 per square foot from $30 at that building after giving it a $350 million facelift.
The Crown
GGP is the main reason Brookfield has taken the property M&A crown this year.
The deal is the third largest real estate investment trust takeover ever, behind Unibail-Rodamco SE’s $16 billion acquisition of Westfield Corp. and Blackstone’s $20 billion purchase of Equity Office Properties Trust, according to data compiled by Bloomberg.