The deal between the mall operators, which must be approved by GGP's shareholders, would create a new REIT, according to the release. For each GGP common share, GGP shareholders can choose either $23.50 in cash, one Brookfield unit or one share of the new REIT.
In December GGP reportedly declined a $14.8 billion cash and stock offer from Brookfield (its largest shareholder with 34% ownership). A tie-up creates one of the the world's largest publicly traded property companies.
Many shopping centers and malls are increasingly looking to diversify their portfolios as longstanding anchors like Macy's, J.C. Penney and Sears close stores and leave gaping holes at their properties.
Those closures are exacerbated by a growing number of specialty retailers that have filed for bankruptcy. Some property executives see opportunity in those empty spaces. About a year ago, as one example, GGP acquired five anchor boxes from Macy's for approximately $48 million, part of the department store chain's previously announced plan to unload 100 stores.
GGP's retail portfolio includes mostly top malls like Chicago's Water Tower Place, where it has established immersive shopping experiences, including the project "In Real Life," which rotates pop-up shops for digital brands. Such shopping centers are doing well even amid a generally downbeat buzz about shopping malls.
In December analysts had speculated that the relative strength of GGP's portfolio could raise Brookfield's bid. Boenning & Scattergood analyst Floris van Dijkum had called last year's offer "too low," telling CNBC that it was likely a floor considering Brookfield's history of low-balling initial bids.
Indeed, a tie-up has been in the works for a while, according to retail real estate analyst Nick Egelanian, president of retail development consultants SiteWorks International.
"Brookfield is making a big bet on U.S. retail and has been signaling that for some time. They were a big investor in GGP and recently bought Oliver Mcmillan," he told Retail Dive in an email. "Brookfield clearly recognizes, as most analysts who look a little deeper into the numbers know, that Amazon is NOT taking over the world of retail, which will remain largely physical forever — and they are very astutely positioning to be a major player in the higher end specialty retail portion of the brick-and-mortar retail real estate market."
In his statement on the proposal Monday, Daniel Hurwitz, lead director and chairman of the GGP board's special committee studying the matter, deemed it a good deal for shareholders.
"After careful consideration, assisted by our independent advisors, the special committee determined that Brookfield's improved proposal, which includes an increase in the cash portion of the consideration and the ability to receive shares in a newly listed REIT entity, provides GGP shareholders with certainty of value, as well as upside potential through ownership in a globally diversified real estate company," he said.